It’s no surprise that, when a business owner or employee rents a car for business purposes, the rental agreement will require that the rental car be repaired or replaced should it be damaged while in possession of the renter.
Here’s the question: if you or your employee is the renter, will your business’s auto insurance policy pay for the damage to the car?
The answer depends on several specific factors. It’s important to note that simply signing a contract obligating your business to pay for the damaged car will not obligate your insurance company to pay. However, if your business auto policy is amended to include coverage for damage to a hired auto, then it may pay for the damage. Keep in mind that the payment might not be enough to satisfy the rental agreement. For example, a deductible will likely apply, and the policy might pay only enough to cover the value of the damage—not for the full vehicle replacement if necessary. Payment for other costs imposed by the rental agreement, such as loss of use or administrative fees, may be limited or excluded.
