Invariably, a last-minute scramble happens a day or two before scheduled employee business trips. Employees need to know what their employer wants them to do at the time the rental vehicle is taken out. Do they purchase the additional coverage offered at the rental counter? Does the corporate policy provide protection for them while they are driving?
Smart Business spoke to Lisa Lancaster, an account executive at DLD Insurance Brokers Inc., about how to handle these sometimes vexing travel problems.
What do employers need to be concerned about with respect to employees renting vehicles while traveling?
Employers should make sure that their employees know what coverages to select when renting vehicles while traveling. Car rental companies will try to sell additional coverages that may already be provided under the employer’s corporate auto policy. Employers should try to negotiate contracts with select rental companies so they can minimize contractual obligations faced by employees when signing a rental agreement.
What are the hidden responsibilities that renters might not be aware of unless they read the fine print?
In addition to assuming one’s own liability, a renter is responsible for the vehicle in the event that it is stolen or damaged. What may not be evident is that the renter is also frequently responsible for the rental agency’s loss-of-use, reasonable administrative and even diminution-of-value fees, which are seldom defined.
What is the best way for a company to communicate the terms of its auto insurance policy or rental agreements with employees?
There are a couple of ways. One of our clients put together a little summary of what people should do as far as the rental of corporate vehicles. It was a single-page document that also incorporates other travel policies — both domestic and abroad — like what to do and who to call in the event that the employee becomes sick or injured during the course of a business trip abroad.
Another way of communicating procedures is through the employee handbook. When available online it is particularly effective as it can incorporate current coverages in place.
Finally, meetings are a great way to communicate. For example, if you have a sales team getting together routinely on various issues, you can incorporate this topic into one of your meetings. It is good to let them know what the corporate concerns are and where they can access the information they will need when traveling.
Is a collision damage waiver a form of insurance?
From the prospective of a renter, collision damage waiver (CDW) offered by the rental agency is not insurance. A CDW releases a renter’s liability for any physical damage that the vehicle sustains in exchange for a payment. It does not release the renter from any person or corporate liability as a result of the rental or operation of that vehicle.
What is the definition of an “insured contract”?
Within a standard ISO commercial auto coverage policy, an “insured contract” includes a rental agreement, but does not provide coverage for property damage to any rented or leased vehicle. It is important to note that the commercial auto policy has evolved over years and older versions may need to be endorsed to extend “insured contract” to rental agreements.
What is “hired auto physical damage” coverage?
It provides coverage for physical damage to a hired vehicle. On a standard commercial auto policy, “hired” is defined as an “auto leased, hired, rented or borrowed.” This does not include vehicles that are leased, hired, rented or borrowed from any of a company’s employees, partners, members (if an LLC) or household member.
What is loss-of-use coverage?
The term “loss of use” is defined under a typical ISO policy as those expenses that an insured becomes legally responsible to pay as a result of a written contract. The term is not typically further defined in the policy. Each policy is different. Many policies cap loss-of-use fees to a certain dollar amount per day, subject to a maximum amount.
What happens when an employee rents a vehicle, but is involved in an accident while on his or her “personal time”?
Without a properly endorsed ISO policy, a carrier could conceivable deny a claim if the vehicle was rented in the name of an employee. As discussed previously, endorsements can be added to the policy to alleviate this problem.
Does a person’s credit card provide adequate rental car insurance?
Credit card coverages are as varied as the types of vehicles out on the road. Some credit card companies offer “free” coverage, which is usually coverage excess over any other available. Many credit card companies provide no extensions for loss-of-use coverage. I would recommend that you obtain copies of your credit card company’s terms and conditions with respect to coverage and review it to determine to what extent coverage is being provided.
LISA LANCASTER is an account executive at DLD Insurance Brokers Inc. Reach her at (949) 553-5670 or [email protected].
