Vol. 9 Issue 4
THE HAACK REPORT
Protecting business from liability
when renting vehicles is not a simple
matter anymore. The “ins and outs”
of coverage versus exposure change
from one rental company to another.
You should know the risks and how
to protect against them.
For years, we have been advising our
clients to purchase Hired Car Physical
Damage on their business auto policy and
to reject the “insurance” offered by rental
companies. Since Hired Car Physical
Damage covers rented vehicles just
as it would a vehicle you own, why pay
extra for the Loss Damage Waiver (LDW)
or the Collision Damage Waiver (CDW)
coverage offered by the rental company?
The answer: Rental agreements have
evolved, creating new pitfalls for renters.
What can happen if you rely only on
your business auto policy for coverage?
About your business auto policy
First of all, if the vehicle isn’t rented by
the business, the Hired Car Physical
Damage coverage won’t respond to
claims. Your employees should use the
business name on the agreement and pay
with a business credit card, if possible.
Other issues: Each year, the liabilities
assumed by the renter under rental agree-
ments expand. At one time, renters were
responsible only for damage or theft. Over
the years, car rental companies added loss
of use. As a result, if the car is in the shop
for two weeks after an accident, you, the
renter, are liable for the revenue the car
rental company has lost. Plus, storage
fees may be passed on to you. In addition,
some agreements now require that you
pay for “diminution of value” — the
reduction in resale value for a vehicle
that’s been in an accident. However, if
you purchase the LDW or CDW offered
by the car rental company, your responsi-
bility for these damages will be waived.
About rental insurance
So … should you use coverage from
the car rental company and remove the
Hired Car Physical Damage from your
business auto policy? This would be a
good solution, if you could rely on the car
rental coverage. Unfortunately, there are