Auto daily rental companies have a unique insurance risk.
They hand over car keys to someone they know virtually nothing about with just a signature.
They only require a minimum record check on someone who wants to rent a vehicle valued anywhere from a few thousand dollars to over $100,000.
In most ways, these risky transactions are based on trust-and perhaps luck- with the expectation that the renter will return the car without damage or issue. Yet upwards of two million rental vehicles each year experience a higher collision rate than non-rental vehicles. Auto daily rental insurance is essential for this potentially expensive transaction.
"Auto daily rental companies need to protect themselves from the loss and liability that is out of their control the moment the car leaves their lot," says Adam Weisman, underwriting manager at Philadelphia Insurance Companies (PHLY). "It's important that they have the appropriate agreements in place to cover their risks."
However, while it's understandable that price may be a consideration when reviewing a carrier's auto rental liability coverage options, it's not always in a company's best interest to choose a carrier because of cost. In the long run, they could end up paying much more due to excessive claims costs.
Instead, a more cost-effective choice may be to turn to an insurance company with extensive experience in three key aspects of this intricate niche.
The Top Three Things Auto Rental Companies Should Expect When Choosing an Insurance Company
When choosing a carrier, car rental companies should consider a carrier's expertise and years of experience controlling cost and loss, ensuring customer satisfaction, and extra services-all of which are covered by these three important categories:
1. A Total Commitment to the Niche's Complex and Unique Intricacies
Many carriers don't have the depth of knowledge PHLY has, with 40-plus years of experience in the niche.
"A majority of our underwriters and representatives have been specializing in auto daily rental requirements for the car and truck rental industry for as many as 30 years or more," says Mark Plousis, Senior Vice President of underwriting at PHLY. "They are on top of state and federal regulations that constantly change to help keep companies compliant and in control of their exposures."
In fact, while standard in the industry today, PHLY was at the forefront of developing the two-part structure of company policy and renter contract that helps transfer risk and loss exposures to the renter. Rental companies can be assured that we have their best interests in mind, so they can concentrate on their business instead of worrying about risk.
"The team at Philadelphia Insurance Companies has been instrumental during the building and growth of our business," says Tim Mahoney, co-owner of Affordable Rentals of Whitman, Inc., Nantucket, MA. "Affordable Rentals was able to focus on our business and know that we were covered reliably. Over the past 30 years, we have found Philadelphia to have the best products and understanding of the Auto Rental Industry."
2. In-House Claims Department, Not A Third Party Administrator (TPA)
"Handing a claim is where the rubber really meets the road for the rental companies," says Plousis. "That is where they see how well their coverage protects them from loss."
When an accident happens, a company should trust that the experts who handle the claim have the necessary knowledge to determine the best financial outcome.
At PHLY, our claims department excels at this crucial juncture. Unlike companies that use third party administrators (TPAs) or have a general claims department, PHLY has a group of examiners who specialize in handling claims for auto daily rental companies. This is critical given the contractual nature of the rental agreement. PHLY's claims examiners are experts at applying the two-tier policy and contract specifics to achieve an appropriate financial outcome, controlling the exposure with risk transfer from the insured back to the renter.
3. Understanding and Managing All Types of Risk
Like any other industry, an auto rental company can face unrecognized risks to its business operations that may have a significant and surprising financial impact.
"We like to help our clients look at their entire risk picture beyond the coverage they have with us," says Weisman. "These complementary services can really help safeguard the entire operation."
PHLY's risk management team can provide auto rental risk management services such as:
Business financial reviews
Contract reviews of rental and lease contracts for appropriate risk transfer wording and any missing protections or requirements
Inspection of facilities and equipment or security, safety, maintenance, upkeep, and code violations
Review of office management practices, including:
Hiring processes (including background checks)
Employee training and safety
Lockbox management
Counter practices
Installation of the PHLY TRAC Vehicle Telematics System in company-use vehicles for tracking driver location, speed, and more
Take a closer look at PHLY's Risk Management Services for a complete list of options available through PHLY and our partners.
Get Superior Niche Knowledge, Claims Experience, and Risk Management at PHLY
Knowing that your auto daily rental company clients face extreme loss opportunities every day, introducing them to PHLY can help ensure their financial security. They can relax knowing auto daily rental insurance is one of more than 120 specialized niches we cover and a flagship product for close to half a century.
Read more about our insurance coverage options here. It would be hard to find a more comprehensive bundle of insurance coverages, a deeper knowledge of regulations, contract and policy experience, expert claims handling, and risk management services. Your auto daily rental clients will be glad you brought them to PHLY, and you will be happy we're there for you, too. Contact your PHLY Rep to learn more.