Understanding Insurance Limits When Renting a Car On Business
Auto insurance is an absolute necessity if you are considering buying and driving a car legally. With over 6 million car accidents in the US every year (and the number growing), getting an auto insurance policy is not only mandatory in 48 states (excluding Virginia and New Hampshire), but it is very financially irresponsible to drive a car without a proper auto insurance coverage. So one must have liability coverage to own and drive a car, but what about rental cars?
Getting a rental car also comes with a lot of terms and conditions regarding the insurance policy. You need to have a proper auto insurance policy, along with sufficient coverage limits to safely rent a car. In this article, we will talk about everything you need to know about auto insurance when it comes to renting cars, especially for business purposes.
Auto Insurance for Rental Cars
If you are out on a trip, or for some reason you need to rent a car, do you need a separate auto insurance policy? For most cases and in most states, your auto insurance coverage is enough to drive the rental car. There are a few conditions, though.
For example, if your auto insurance coverage just has liability coverage, it might not be enough for the rental company. Rental car companies need you to have both comprehensive and collision coverage along with liability coverage to drive their cars. If that’s the case, then you’ll have to get comprehensive collision coverage, or the much easier and quicker way to do it would be getting rental car insurance (that most rental companies offer).
Renting a Car on Business
The moment the term “business” is added, things get a little complicated and a lot more costly. When you buy a general auto insurance policy, be it liability coverage or collision, or comprehensive coverage, they are only valid for personal, non-commercial use.
Insurance companies are happy to cover the cost of accidents as long as you use your car for personal use.
When it comes to auto insurance for business use, the policy prices climb higher, and the minimum coverage limit bumps up as well. Auto insurance companies need you to get a commercial/business auto insurance policy with a much higher coverage limit.
If you crash a car, rental or personal, and the auto insurance company finds out that the car was being used for business purposes, not only can they reject your insurance claim but also drop you from the policy. You’d be all on your own, and pay hundreds of thousands of dollars in damage fees.
Understanding Insurance Limits When Renting a Car on Business
Different auto insurance companies have slightly different conditions when it comes to business auto insurance. The same goes for renting cars. When you rent a car for personal use, the liability, collision, and comprehensive coverage limits are slightly above the state-mandated limits.
For example, if you are in a state where the minimum coverage limit is much higher than what your state’s minimum coverage limit is, the rental company would ask you to get their policy.
But when it comes to auto insurance policies for business use, the minimum coverage limit climbs higher. You could be looking at liability coverage as high as a million dollars for bodily injury per accident.
So the best thing to do when you are on a business trip is to get a rental car insurance policy from the car rental company and specify the business use of the car so that the coverage limit is enough to cover the cost of accidents.
Here is all the necessary insurance coverage you need to get while using a rental car:
Liability coverage is the policy that covers the cost of medical treatments and car repairs of the other driver if the accident was your fault. This policy is mandatory in almost every state, and you won’t be able to rent a car if you don’t have one (or you don’t buy it from the rental company). In case you get in a car accident, you are liable to pay for the entire cost of the accident to the other driver if the car accident was your fault.
There are three components of liability coverage. The first part is called bodily injury per person, and it is the amount of money the insurance company would pay for the medical treatment of one person. The second part is bodily injury per accident, and it is the total amount of money the insurance company would pay for medical treatments per accident. The final part is the amount of money for repairs of the car or the property.
Liability coverage cannot be claimed by the policyholder as it is exclusively for the other driver. Liability coverage is often the most expensive auto insurance policy. Since it is mandatory, select the best car insurance company that gives the best coverage at the lowest rates.
Comprehensive and Collision Coverage
Comprehensive and collision coverage is exclusively for the car that you crash in an accident. This is the reason car rental companies require you to have these two coverages. If you already have these coverages, then just make sure the coverage limit is adequate, and you’d be good to go.
Collision coverage will cover the cost of repairs for the damages to the car due to any collision while you are driving the car. Comprehensive coverage covers the cost of repairs for all the damages that may happen while the car is parked. This includes natural calamities, theft, riots, vandalism, etc.
It is better to get rental car insurance as it may include coverage for other expenses such as administrative fees, towing charges, etc. Just make sure to let the rental company know the business purpose of renting. And you are good to go after increasing the coverage limit according to the requirement of the state you are in and have the three essential auto insurance policies.