There are plenty of essential things to consider before renting a vehicle for your business, and it could prevent liability in the process. If your employees travel to a convention or act on your business’s behalf, they may need transportation. Rental cars are convenient and relatively inexpensive, especially if you can apply credit card perks. However, renting a vehicle requires signing a contract with the rental company, which can muddy the waters regarding legal responsibility.
Renting a Vehicle For Your Business: Things You Must Know
Before using a rental car service, ensure you know the answers to the following questions.
Are Renters Liable for Damages?
According to most rental contracts, renters are liable for physical damage to the hired vehicle. If an employee causes damage to the car while using it in the name of a business, that business is liable, in most cases, not the individual. Since the degree of liability varies by contract, employees and corporations should carefully review every rental agreement before committing.
Do You Need Commercial Auto Insurance?
Businesses may rent a vehicle without their own commercial auto insurance, as there is no legal requirement for it. However, it’s not in their best interest to do so. Rental companies must offer insurance following state laws, but this liability insurance may not cover total damages. To protect themselves, corporations should maintain their own policies to ensure they don’t get stuck paying out of pocket.
Do You Need Personal Auto Insurance?
In most cases, employees don’t need personal auto insurance to drive a vehicle under the company name. Personal insurance may not apply if the employee uses the car solely for business purposes. Who gets insurance under a commercial auto policy? While the business is technically the insured, policies cover employees who use cars owned, hired, or leased by the company, so long as said employees have permission to do so.
Do You Need To Purchase a Loss Damage Waiver?
Companies that don’t have commercial auto coverage may escape liability by purchasing a loss damage waiver. Offered by the rental company, this waiver ensures renters will not have to cover the cost of physical damage or injury to third parties. However, insurance policies are generally more affordable and offer more extensive coverage.
Should Employees Put Their Names on the Rental Agreement?
The name on the rental agreement significantly impacts insurance claims should the driver get into a collision. Employees who list themselves on the contract become liable for damages, and their personal insurance policies come into play. In contrast, when the rental agreement uses the business’s name, the business’s commercial auto insurance handles any claims.
What Do Drivers Need To Rent a Vehicle?
Any employee renting a vehicle for commercial purposes should have a valid driver’s license. Employees may also need access to a company credit card to pay for the rental. If individuals don’t have access to company funds for this purpose, they may have to list themselves on the rental agreement.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
