When you or one of your employees travel on business, it is very common for the traveler to rent a vehicle for the time spent in any one place. You may not know if you should pay extra at the car rental agency for the physical damage or loss damage waiver.
In order to answer this, we need to consider exactly who will be renting the vehicle so that we may determine if there is coverage under the commercial vehicle insurance policy.
In other words, will the rental be in the name of the traveling employee or the owner’s business name? This is what will determine physical damage transference in the event of an accident.
There is, however, more information one needs in order to assess the need to purchase the rental agency’s insurance policy. If an accident occurs, then obviously, the rental agency suffers loss of revenue from that vehicle, and we need to consider whether the your commercial policy will pay that loss as well as paying for damages.
We also need to look at the rental car company’s ability to assess “diminished value” loss to the client.
Many years ago, rental companies kept a vehicle in rental service. But these days, most put “program vehicles” up for sale before they reach a specified mileage. Once the vehicle has had repairs for an accident, the vehicle suffers a “diminished” value.
Please talk with your licensed insurance professional if you rent vehicles for your business.
While traveling from city to city, it is common for a business to rent a vehicle, either by the owner, officer, director, or employee. I often receive a call asking if they should purchase the physical damage or loss damage waiver. My response is always the same. I need to know exactly who will be renting the vehicle to determine if there is coverage under the commercial vehicle insurance policy. What I mean is, will it be in the owner’s business name, or individual. This is what determines physical damage transference and I explain how that may work in case of physical damage and liability to the rented vehicle.
However, there is more information a client needs for determining the need to purchase the rental agency’s insurance policy. I talk about the fact if an accident occurs, then the rental company suffers loss of revenue from that vehicle and whether the commercial policy will pay such loss in addition to paying for damages. I also talk about the rental car company’s ability to assess “diminished value” loss to the client. Many years ago, rental companies kept a vehicle in rental service. Today most place the vehicles for sale before it reaches a specified mileage. Because the vehicle has had repairs for an accident, there is now “diminished” value. However, this is subjective before a sale has taken place. Please talk with your agent if you rent vehicles for your business or call one of ours for additional information.
Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect. Always check with your chosen professional as to statements made in this blog for your particular situation.