Car rental insurance coverage as you know it is about to change – dramatically. This is thanks to an innovative company, Lula, run by cofounders, Mike and Matthew Vega-Sanz. Before discussing their amazing new formula for rental car insurance, I need to outline the current rental car insurance market. Up until now, car rental agencies had only orthodox options for rental car coverage. Most companies would purchase a standard Garage Keepers Policy, Commercial Vehicle Physical Damage Policy and a Commercial General Liability Policy. As the premium rate climbed in recent years, rental agency owners began limiting their coverage or dropping certain types of coverage all together. For example, in today’s market typical rates in Miami are running about $150 monthly per car for just Garage Keepers and Commercial Vehicle Physical Damage policies. Some smaller agencies are paying nearly $200 per car per month.
These numbers are staggering. That means that the agency will pay about $360,000 per year for a modest 200-car fleet. As if that was not bad enough, the insurance carriers are very quick to drop an insured over minimal losses on the loss run report. So many of the rental agency owners will avoid placing even a single claim for physical damage. The frequency of a 200-vehicle agency to have a total loss that is uncovered by any third-party policy is about one to two uncovered total loss claims per year. So even if the rental agency only submits their total loss vehicles were no other coverage exists, the rental agency will likely pay more money in premiums than they would typically recover from the insurer during a policy period. For this reason, many are forgoing the coverage, except for the bare minimum to satisfy any lienholders or finance companies. So, what options are left? This is where Lula comes into play.
Lula has found a way to offer affordable insurance to the rental car companies that covers the vehicle while at the terminal, out on service or on a rental. There innovative thinking has given them the opportunity to secure insurance policies from large insurers at a competitive rate. It was their realization that the insurance industry was handling risk by putting the cart before the horse. The insurance industry, especially property and casualty, have always focused more on claim mitigation than proper risk assessment. This is not to say that there is no risk assessment at the inception of the policies, but the current formulas for risk assessment are rudimentary when compared to todays data access and technological advances. So, Mike and Mathew Vega-Sanz started focusing on the risk analysis in ways that have not been done before in the insurance business.
The Vega-Sanz brothers developed a software that can almost instantaneously determine the potential liability of a renter/driver. The software will vet the driver (meaning rate their potential risk as low, medium, or high). With the data captured, they determine whether the driver will be covered under the master insurance policy. The software captures thousands of data points to compile the potential risk rating. It is due to this risk assessment that many of the industry leading insurers are more secure underwriting policies in a market where they would have not taken on the business with traditional risk assessment methods.
So today, you can get higher limits, lower deductibles, and greater service for less than traditional insurance market coverage thanks to Lula. Lula is making mobility viable and profitable. To find out more about Lula, check them out at www.lularides.com.
Comment to us regarding your stories behind coverage problems and any solutions you have found for insuring your mobility fleet or send us your ideas for future blog posts.