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Q: Does my Business Auto Policy cover me if I rent a car?

A: This can be a complicated subject.  If you have a Commercial or Business Auto policy that includes Hired and Non-Owned Auto Liability, then you have automatic Liability coverage if you rent or hire a vehicle.  You must purchase Hired Car Physical Damage to have Comprehensive and Collision coverage on a rental car.  However, there are gaps in coverage and should you have an accident in a rented car, you could be held responsible for the “Loss of Use” or lost rental income for the amount of time the car is not available to be rented.  This coverage is not available under your auto policy.  The best way to protect yourself is to purchase the Loss or Collision Damage Waiver from the rental company and because it is relatively inexpensive, we always recommend that our clients purchase it.

Q: What limit of liability should I purchase?

A: There is no “correct” answer to this question. While an insurance advisor can share historical and personal experience to assist you in making a decision, in the final analysis, no one knows and understands the risk involved in your particular business better than you. Ultimately, it has to be your decision.

Q: Is property of others, which is temporarily located on my premises, covered under my Property or General Liability policies?

A: Unless your Property policy has a built-in provision or has been endorsed, it would not automatically cover property of others.

     The General Liability policy form typically excludes coverage for damage to property in your care, custody, or control. However, in situations where property of others, such as an automobile, happens to be on your premises and sustains damage due to your actions, your General Liability policy would typically afford coverage, provided the property was not in your care, custody, or control at the time of the accident.

Q: My General Liability policy provides a $100,000 limit for damage to rented premises that I occupy, when that damage results from my occupancy; however, the building I rent is worth much more than $100,000. How do I eliminate this risk?

A: One way to accomplish this, of course, would be to simply purchase a higher limit; however, there are two issues with that course of action. First, there would be an additional premium charge. Second, many insurers are reluctant to increase this limit beyond $250,000 - $300,000.

     A better solution (and no cost to you) would be to require the lessor to add you as an additional named insured on the lessor’s policy or have his or her insurance company grant a waiver of subrogation in your favor. In the unlikely event that the lessor does not carry insurance, you could simply have a hold harmless agreement executed to relieve you of any liability for damage to the occupied premises.