Overlap: Understanding Insurance Limits When Renting a Car on Business

By Mike Drew, The Reschini Group

Understanding Insurance Limits when Renting a Car for Business
Understanding Insurance Limits when Renting a Car for Business

Your flight had been delayed and you’re running late for an important appointment in a new city.  All you want from the car rental stand is to get registered, grab the keys, and follow the GPS to your destination.  But what are the rules? Let’s start with the basics – Liability coverage, which protects against bodily injury or property damage to a third-party arising out of the use of a rented vehicle, and Physical Damage, which protects against damage to the rented vehicle.

Liability Coverage – A firm’s liability risk exposure can be protected when renting a vehicle by purchasing Hired & Non-Owned Automobile (HNOA) Liability coverage, which protects the Insured for liability arising out of the use of vehicles within the course of business, which is not owned by the Insured. HNOA would shield the Insured Entity from liability when exposed to employees using their own vehicles on company business (Non-Owned Auto Liability) and employee renting or hiring vehicles (Hired Auto Liability).  HNOA Liability coverage is an extremely important coverage to consider if you have employees using their personal vehicles and renting vehicle for business within the U.S.

Physical Damage – Hired Car Physical Damage provides protection against costs associated with damages to a rental car when used within the course of business in the U.S., and helps mitigate a loss suffered against the company should that vehicle be rented under the company’s name. Since most vehicles are typically rented under the employees’ name, it is prudent to have the “Autos Rented by Employees” endorsement added to the policy. If employees are using corporate credit cards or their personal auto coverage to opt-out of the physical damage coverage when renting a vehicle for business, please note that coverage may not be sufficient to cover a total loss, thus exposing your organization to possible out-of-pocket expenses.

Each year, liabilities assumed under rental agreements have expanded to the point where, if the car spends two weeks in a repair shop following an accident, the renter becomes liable for the rental company’s lost revenue. In addition, storage fees may be passed on to the renter and, under some agreements, the renter may be required to pay for “diminution of value,” or the reduction in resale value for a vehicle that has been in an accident. Responsibility for these damages may be avoided by purchasing waivers offered by the car rental company.

To activate coverage, where a credit card used to rent the vehicle pays for the loss if your insurance doesn’t, the cardholder must be the primary renter and must decline the Limited Damage Waiver/Collision Damage Waiver options. Credit card coverage varies, and may change at the credit card company’s discretion. Also, if the renter violates any terms of the rental agreement, credit card coverage is voided. Plus, credit cards may exclude rented SUVs and weather-related damage, like flood and hail.

Don’t let the hard sell push you into a decision that’s not right for your particular situation.  The professionals at The Reschini Group can help you sort out the best option for you to select when renting a car.  Contact us at 724-349-1300 to set up a time to talk.

Copyright 2016 The Reschini Group

 The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.

Plugging the Gap: The Need for Drive-Other-Car Coverage

By The Reschini Group

If you take five seconds to think about it, the number of vehicles on the road at any given moment is absolutely staggering.  Then Fill the Gaps red sign with sun backgroundthink of the various types of drivers, the owners of those vehicles, the accidents that remain an ever-present possibility, and it becomes clear that car insurance is, by necessity, a very complex industry.

Here’s just one unique slice of that complex world.  If an employee of a company were provided with a company vehicle – and if that employee does not own a car of his or her own, and subsequently has no personal automobile insurance – then the employer has a real and potential liability exposure, should that vehicle be involved in an accident.

Drive-Other-Car coverage closes that particular gap for employees who do not have their own personal automobile insurance policy, when they are driving a “non-owned” vehicle for personal use.  The insured (the company that owns the vehicle) is not at risk; it is actually the employee without automobile insurance who is at risk, and this endorsement provides them with protection.  The full technical definition is as follows: Drive Other Car endorsement is a commercial auto endorsement designed to provide non-owned auto coverage under a commercial auto policy similar to that which would be provided under a personal auto policy.  A Drive Other Car coverage (broadened coverage for named individuals) endorsement is commonly used when an executive officer, for example, does not carry personal auto insurance because he or she is furnished a company auto. Coverage under the endorsement would come into play in the event the individual designated in the endorsement (including his or her resident spouse) is driving a non-owned auto for personal use. Coverage under the endorsement does not apply if the auto in question is owned by that individual or by any member of his or her household; or the auto is used by either of these individuals while working in a business of selling, servicing, repairing, or parking autos.

The best scenario, of course, is for any employee who may be driving a company-owned vehicle to carry his or her own personal automobile policy.  For those who don’t, however, Drive-Other-Car coverage can include coverage of liability, medical payments, uninsured motorist and physical damage.

Be sure about your coverage.  The professionals at The Reschini Group are well versed in these questions and how you can be adequately covered in any situation – including the myriad combinations of factors surrounding car insurance.  Contact us to learn more.

The idea, after all, is to get behind the wheel without getting behind the 8-ball.  And to do that, you need to plug all the gaps.

Copyright 2016 The Reschini Group

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.