With increasing competition and a need for better mobility of rental goods, rental businesses face many challenges today. Businesses rent out their equipment to all sorts of customers, each of whom use it differently. Since customers don’t shoulder the burden of ownership for a rental item, they don’t have to concern themselves with its maintenance.
This makes it likely for them to use rental equipment carelessly, exposing your inventory to potential damage during rental periods. The repair and replacement costs of mishandled inventory could be huge. Furthermore, poorly handled equipment might also take a dip in functionality.
This is why you need to make sure all your inventory is protected and covered for against any imminent risks! Furthermore, your inventory and workplace can get damaged during natural disasters or accidents. These unavoidable events also put the stakeholders of your business at risk, and make them likely to sue you for any injuries.
Importance of Rental Insurance Policies
Concerned stakeholders may include a disgruntled customer, an unhappy employee or any person claiming that they got injured by your equipment or at your workplace. Such lawsuits, if not dealt with promptly, can sink your business in no time.
Having a well-grounded rental insurance policy saves you from employee and customer lawsuits. It also covers for exorbitant medical and repair costs in case of such events. The better you are at nudging out rental liability, the more you can protect your business and your assets. For these reasons, rental companies should invest in watertight insurance policies.
In one of our previous blogs, we talked about why you need to have insurance for your rental business. In this article, we will highlight some of the recommended insurance coverage policies to save your rental business from trouble.
1. General Liability
This type of rental insurance protects your business against a wide variety of claims such as those of physical injury, negligence, omissions, errors, property damage or advertising mistakes. It assists in paying for legal expenses like court settlements and attorney fees in case your business faces a lawsuit.
A few trusted general liability insurance companies include GEICO, Hiscox and Liberty Mutual Insurance.
2. Business Owners Policy
Business owners policy (BOP) works for small businesses. It provides insurance at a lower premium. It combines several policies together to provide rental business owners with a single convenient plan to safeguard themselves against various business risks.
BOPs are important because they prevent you from forking your money out to many unnecessary individual policies.The BOP covers a range of expenses incurred within a year of the physical loss. These may include civil authority coverage, accounts receivable coverage, interruption of computer operations, and fungi coverage etcetera.
AP Intego has been assisting small business owners to get BOP insurance coverage for the last decade.
3. Cyber Liability
Cyber liability insurance protects users of technology products and services from trespasses in cyber security. Often times, sensitive data regarding your business is infringed on by unauthorized users in the online space. This can leave you at the risk of having your customer’s personal and financial information exposed.
Such breaches may originate from malicious software or hackers attempting to rob you of your data. Resolving cybersecurity breaches can be really heavy on your pocket. Cyber liability insurance helps you deal with it by covering for the costs of credit monitoring, customer notification, and other legal and penal charges resulting from the data breach.
Some of the top cyber liability insurers in the US include Chubb Limited, AIG and XL Group.
4. Commercial Auto
Many rental businesses need service vehicles and trucks to transport rental goods to their customers. Any accidents during transit can be detrimental to your vehicles, your staff and your pocket. Commercial auto insurance allows companies to repair or replace damaged service vehicles within the insurance policy.
It usually covers the cost of physical injury and medical payments caused by accidents, and collision damage of the service vehicle etcetera. For small business owners, the average annual insurance cost ranges from $750 to $1200 per vehicle.
You can get your vehicles insured by some of the largest auto insurers such as Progressive Insurance or State Farm.
5. Workers’ Compensation
Workers’ compensation covers medical expenses of employees for injuries incurred at work. It also covers for missed salaries during the leave period until they resume their jobs.
Furthermore, it reimburses employees and their families for death or disabilities caused at work. It also offers vocational training in case a worker needs to switch their job as a result of the injury.
A fair worker’s compensation policy prevents workers from suing the employer for the latter’s negligence. It varies considerably based on the occupation of an employee and the state where the business is incorporated.
The best workers’ compensation insurance companies for you to consider include Travelers Group, Hartford Group,
6. Inland Marine
The term “marine” might seem like an insurance policy that covers for transporting goods across the sea. It is quite the opposite of that. It compensates for goods that are transported to third parties over land. While commercial auto covers service vehicles that carry goods, inland marine covers the goods being transported.
It protects against any inventory damage incurred from collisions or cargo theft. This type of insurance especially assists in covering for high-value items such as computers, and construction, medical and photography equipment. It also provides coverage for the loss of third party property in your possession.
Inland marine is also called a ‘floater’ since it can be customized to cover items that basic insurance policies don’t. Since it covers goods in transit, it is highly beneficial for rental businesses whose inventory is always on the move.
Liberty Mutual is also popular for its inland marine insurance policy.
7. Property Insurance
Property insurance covers both immovable and movable property. Immovable property includes office buildings and fixtures, whereas movable property consists of inventory, work tools, heavy equipment and computers. It can even be attuned to cover theft and damage during employee usage.
Damage covered by property insurance normally covers property losses resulting from natural disasters and not from acts of war or terror. Property insurance coverage can be classified into: replacement cost, actual cash value, and extended replacement costs.
Replacement cost covers the cost of replacing your damaged property. Actual cash value covers the replacement cost after deducting depreciation expenses, and extended replacement cost covers for additional construction charges that exceed the limit stipulated in the insurance agreement.
Some leading providers of property insurance in the US include State Farm, Berkshire Hathaway and Liberty Mutual.
Investing in rental insurance goes a long way!
Running a rental business can be a grueling task. You have to deal with a variety of customers and vendors. You are always at risk of losing your rental inventory or receiving damaged items from customers, which makes rental insurance policy your primary weapon to stay in the game for the long haul.
It’s always wise to have legal aid at hand when it comes to insurance. Thus, having a company lawyer is recommended. Documenting these policies in your signed rental agreements keeps both your suppliers and customers on the same page and allows you to continue your business operations from procurement to rent outs smoothly.
Although investing in an insurance policy may sound costly at first, but a few pennies in insurance go a long way in ensuring the long-term viability of your rental business.
Read more: A Quick Guide in Filing Rental Sales Tax
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With the use of EZRentOut, you can also manage your rental insurance policies, access your agreements online and attach them with orders so your customers are up to date about your company policies.