Don't Let Rental Cars Wreck Your Business Trips

This material is provided for informational purposes only. Before taking any action that could have legal or other important

consequences, confer with a qualified professional who can provide guidance that considers your unique circumstances.

When you and your co-workers travel out of town on business, there is often a need to rent a car for transportation. For in-

stance, suppose you need to meet face-to-face with a new client whose offices are two time zones away. Typically you'll fly

to the locale and then rent a car at the airport. You then drive to your client's office for a meeting. Later, you drive the client

However, uninsured liabilities loom if you don't take the proper steps when you or any other company employees rent a car.

If you are involved in a traffic accident you may find yourself liable for:

• Physical damage to the rental car

• Physical damage to a third-party vehicle, or vehicles, involved in the accident

• Bodily injuries to third parties caused by the accident

• "Loss of use" exposure to the rental company for the time the damaged car is out of service.

Making Sure You Are Insured

When driving rental cars on company business you have options for getting needed insurance to cover potential liabilities.

Which options are best for you will depend upon various factors. Let's look at your insurance choices.

A Business Auto Policy (BAP)

to request such coverages and they may not be available on some policies.

Typical BAP coverage may be endorsed to include:

Hired Auto Liability: A typical policy for a small design firm would include $1 million for a combined single limit for bodily injury and

property damage.

• Hired auto physical damage: Likely limits would be $50,000 to $100,000 if this coverage is provided.

• Hired auto loss of use: Typical limits would likely be around $65 per day up to $750 per accident.

• What if your company does not have a BAP? Your business owner policy (BOP) or general liability (GL) policy may have by en-

dorsement hired/non-owned auto liability coverage, but likely no physical damage coverage. Check your BOP and GL policies to

determine your actual coverages, limits and deductibles. Again, you may need to specifically request such hired/non-owned auto

coverage.

The unique benefit of insurance offered by rental car companies is the damage waiver, which typically costs $10 to $30 per day. Es-

sentially, the damage waiver removes all of your liability for loss of or damage to the rental car, the loss of use of the car that follows

and, likely, any "diminished value" liability for the reduced resale value of the car due to the accident. A rental car driver who is in an

accident can essentially walk away from the scene with no financial responsibility to the rental car company. The driver also avoids

the hassle of having to file claims paperwork with the rental company.

Keep in mind, however, that there may be driving restrictions (e.g., no off-road use or excessive speed). If terms of service are violat-

ed, the waiver could be nullified. Also, the damage waiver does not include liability coverage for damages caused to others or loss of

stolen property from the vehicle. Your BAP insurance will likely apply to those third-party damages and claims, unless you also pur-

chase additional liability coverage through the rental car company.

Credit Card Coverage

age to be activated. Check for any such limitations of coverage on any credit card used to reserve and pay for rental cars for company

business.

Driving North of the Border

Canada has a few different wrinkles when it comes to insuring rental cars. In fact, each province may have its own unique regulations

that apply to liabilities related to rental vehicles.

Many rental car liabilities can be covered through non-owned auto endorsements and legal liability coverages that apply to damages

to hired vehicles. These may be available through endorsements to your commercial general liability policy.

Car rental agreements themselves can be different in Canada as well. The major car rental companies may offer blanket policies that

cover damage to the rental car, but significant deductibles may apply. Deductible insurance may also be available. Check with a Ca-

nadian insurance broker to make sure you have appropriate coverage when reserving a rental car north of the border.

The details of your rental car policy will depend on your unique needs and circumstance, but as general rules:

transportation is to make a single trip from an airport, to your business destination and back to the airport, a taxi or ride-share

vehicle will likely suffice.

2. Reserve and pay for rental cars using company credit cards. The use of employee personal cards for reservations or payments

may jeopardize coverage under your BAP and cause administrative headaches for the company and the employee.

3. Purchase the damage waiver when using a rental car. The peace of mind and full protection from liabilities to the rental car com-

pany due to an accident is well worth the $25 per day or so it costs for the waiver. You might also be able to negotiate a di scount

on waivers or a complete corporate rental contract specifying added coverages by doing all of your business with the same rental

car company.

4. Set limits on employee use of the rental car. Prohibit them from driving rental cars for after-work activities such as golf excur-

sions, dining/drinking, sight-seeing, etc.

you avoid coverage gaps.