Self-drive hire insurance Q&A

For many businesses, other than sometimes being a legal requirement, insurance and the type of cover to have often boils down to a matter of insurance cost versus the potential cost of a claim. Here we answer your most frequently asked questions surrounding self-drive hire insurance.

  • We've started thinking about whether we should switch to self-insurance for our fleet of over 120 rental vehicles that are currently comprehensively insured in a conventional manner. What do you feel is the key thing we should consider before going down this path?

  • Working on the assumption that by self-insurance you are referring to arranging insurance cover with a very sizeable excess or deductible in respect of every incident, the key issue that you need to think about before going down this path is whether your balance sheet is strong enough to cope with the business paying what may typically be something between the first £10,000 and the first £100,000 of every incident.

    If there were a string of sizeable losses, how many such claims could you afford to pay? If your balance sheet is sufficiently strong, then self-insurance is certainly an option worth exploring, particularly if risk management is also taken very seriously. Needless to say though, it's a path that requires careful consideration before a decision is taken.

  • We run a medium-sized car rental company. Our business interruption cover has always been arranged on an 'increased costs of working' only basis. We've recently begun thinking about whether that cover is enough or whether we should go for cover on a loss of gross profit or revenue basis. What advice can you offer about cover arranged on an 'increased costs of working' only basis?

  • Many firms involved in car rentals feel that 'increased costs of working' cover is sufficient. We advise you to carefully consider issues such as the following:

    1. How long it might take to get a temporary office up and running;

    2. Whether suitable alternative premises is readily available;

    3. What other additional costs might be incurred in keeping the business afloat;

    4. Whether you could still use your premises as an operating centre for your rental vehicles immediately following a catastrophic fire.

    Think carefully about these issues and ask us for advice.

  • There's a clause in our property damage policy that says that cover is subject to 'average'. What does that actually mean?

  • 'Average' means that in the event of a sum insured being inadequate; any claim settlement may be reduced by an amount proportionate to the level of under-insurance. For example, if a sum insured should be £500,000 but is set at only £250,000, in the event of a fire causing £10,000 of damage, only £5,000 may be paid.

Want to find out more about our Self-Drive Hire Insurance?

More details