Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 18, 2020

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Key takeaways...

  • You must have commercial rental car insurance when you rent a car
  • Personal car insurance will not protect you if you are involved in an accident
  • A loss damage waiver covers you in case the rental car is stolen

Many people use their own private car insurance to cover a rental car. However, private car insurance will not cover business use of a vehicle, and it will not cover business use of a rental car, either.

Commercial rental car insurance must be bought to ensure that rental car insurance is provided while the vehicle is in use for business applications.

There are many commercial applications for a rental car. Your company may need to rent a vehicle for travel associated with the business.

You can get car insurance rental quotes for all uses right here when you enter your zip code above!

Table of Contents

Private Insurance Won’t Cover Your Business

According to the industry specialists at the Insurance Information Institute, private car insurance will not cover business uses of a rental car.

If your business has commercial car insurance, you can check with that insurance provider to find out if it will extend to cover rental vehicles or equipment.

Because the liability for damages is with the business and not the owner, personal insurance won’t cover it.

There is a split between all personal and commercial insurances, so you need to have insurance to cover both options.

The liability of a business is much more complicated than the liability of an individual.

Employees may have access to vehicles and businesses have many vehicles that may be carrying potentially dangerous materials that require special permits and commercial driver’s licenses.

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Necessary Coverage

You are required to purchase your state’s minimum amounts of liability insurance when you rent a car, though you may want to opt for more. This coverage is called liability insurance.

It is used to pay for injuries and damages caused to others in an accident with the rental vehicle.

The next required coverage is called a loss damage waiver, which means you are really just paying to waive your liability, or financial responsibility if the rental car is stolen or damaged.

Then, the rental agency’s insurance takes over and pays for the damages. Make sure that the loss damage waiver you purchase also covers additional costs such as towing and loss of use.

Optional Coverage

The necessary coverage packages take care of your liability and damages to the rental car, but that still leaves the driver and any passengers without injury coverage.

One optional coverage package is personal accident insurance.

This coverage pays for medical injuries sustained by the driver and passengers. It is important to keep in mind just how expensive medical care after an accident can be, so make sure you purchase enough protection.

Personal accident insurance is an important part of commercial rental insurance.

If it was personal rental car insurance, then the driver’s insurance or health insurance would cover the costs of injuries.

However, because the driver and passengers are in business, it is likely that any injuries will be covered by workers’ compensation insurance.

Personal accident insurance will allow your business to forgo the use of its workers’ compensation insurance.

One last rental car insurance option is also important. Personal effects coverage pays if items are stolen from the vehicle.

Generally, such equipment and information will be of great importance to your business, so it is important that you protect it from theft as much as possible.

You don’t want your business to have to bear the full cost of replacing important equipment or tools or bearing liability costs for losing confidential data.

Check with Your Commercial Car Insurance Provider

Before you commit to any commercial rental car insurance, you should first check with your commercial auto coverage company to find out if any of your commercial car insurance will cover the use of a rental vehicle.

You may find that your commercial car insurer might cover liability but not collision or medical.

Each company will have its own policy on how far your coverage extends. 

Consider purchasing a rider policy that will cover the use of a rental car for a short duration, or they may offer you an umbrella policy to cover your company’s liability.

If you don’t have either commercial auto or business insurance, then you will have to purchase coverage for your rental car use elsewhere.

Even if you get an umbrella policy, you will still need to buy collision and comprehensive coverage in the form of a loss damage waiver.

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Check with Your Credit Card Provider

Another option that you may also have is to check with your business credit card provider. They may be able to offer you some sort of coverage for a commercial rental car, as such options are usually already a part of your credit card service.

They will generally cover the loss damage waiver, but you are cautioned to check the fine print.

According to the travel website TravelSense, some credit card insurance is only supplemental to a primary insurance. 

Remember, you must purchase the rental with the credit card that will be providing protection. If your credit card company doesn’t offer enough protection, then buying coverage is your best bet.

Online Commercial Rental Car Insurance

There are many online companies that provide rental car insurance. You can get a quote for coverage,  just like for private car insurance coverage.

You can look up their license utilizing the National Association of Insurance Commissioner’s Consumer Information Source (CIS).

If you can’t find the company by searching its name or the company won’t give you a code, you can be safe in assuming that it is a scam.

You can even report the suspected fraud on the very same website so that no one else is a victim of a fraudulent insurance company!

Not all online rental car insurance companies are fraudulent. You can generally find enough coverage for less than you would pay with the rental agency.

Compare Prices

If you have enough time, your best bet is to get quotes from multiple sources to compare.

You might find that an online rental car insurance provider is the most cost-effective, or you might find that the rental agency’s preferred provider actually has the best rates.

Make sure that you are getting quotes for the same amount of coverage so that you can really compare each company’s offer for coverage side by side.

You also may want to buy protection apart from your business’s insurance coverage in order to avoid having to file a claim with your company’s insurance.

In this way, you might avoid deductibles or rate increases that can accompany a claim, according to CBS Money Watch.

Once you have reviewed all of your options and compared all of your available rates, you are ready to rent a vehicle for commercial use, knowing that you, your business, and your employees are protected as much as possible!

Protect yourself as much as possible by researching all of your car insurance options for FREE Enter your zip code search box below!

References:

  1. http://www.iii.org/articles/do-i-need-separate-rental-car-insurance.html
  2. https://en.wikipedia.org/wiki/Damage_waiver
  3. https://www.metlife.com/insurance/accident-health/accident-insurance/
  4. https://www.geico.com/information/aboutinsurance/umbrella/
  5. https://www.progressive.com/glossary/comprehensive-and-collision/
  6. http://www.travelsense.org/tips/carrentaltips.cfm
  7. https://eapps.naic.org/cis/
  8. http://www.cbsnews.com/8301-505146_162-39640435/why-you-should-buy-rental-car-insurance/