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What Types of Insurance Does a Party Rental Business Need?

What Types of Insurance Does a Party Rental Business Need?

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What Types of Insurance Does a Party Rental Business Need?

Party Rental Business Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Party Rental Business Need?

From weddings to birthday parties, fairs, and just about everything in between, party rental businesses keep busy catering to many events. A party rental business helps customers save money because instead of purchasing equipment for a single event, the customers can rent and return the party equipment. It’s a win-win situation: The customer saves money, and the business turns a profit by repeatedly leasing its equipment.

Inevitably, party rental businesses have several layers of risk, leading to potential financial hardships. However, insurance covers most risks and is an excellent tool to shield businesses from expensive losses and lawsuits.

Related: Guide to starting a party rental business

What Are Some Risks for a Party Rental Business?

Some of the risks that party rental businesses face include the following incidents:

  • On-site customer injuries
  • Sudden loss of business
  • Injuries from using rented equipment
  • Employee injuries
  • Car accidents

On-Site Customer Injuries

Party rental businesses will likely have numerous customers on-site to lease, pick up, or drop off rental equipment. The main concerns for on-site injuries are slips, trips, and falls. For instance, wet or poorly maintained walkways are the primary culprits of slip or fall injuries.

Additionally, customers could be injured during equipment demonstrations or have their property damaged during loading (i.e., vehicles and trailers). Heavy equipment, forklifts, and loading equipment are also customer injury hazards.

Sudden Loss of Business

A sudden loss of business typically results from an incident occurring at the party rental’s building. For example, a large building fire can damage valuable, hard-to-replace equipment and close the business for repairs. When the party rental business is closed, it cannot serve customers, resulting in revenue loss.

Often, a party rental’s equipment is costly and challenging to replace. Any substantial loss to the inventory may close the party rental business for an extended period while items are re-acquired.

Injuries from Using Rented Equipment

Rented equipment poses an injury risk to clients. For example, if rented items are altered, damaged, or incorrectly set up, they may fail or malfunction, causing injury or damage. Inflatable play equipment is another party rental item that presents a safety and injury risk at children’s parties if the inflatable collapses or moves. These incidents could result in injuries and a completed operations lawsuit against the business.

Other hazards include leasing damaged, recalled, or malfunctioning equipment. Additionally, customers can injure themselves by setting up or using the equipment if they are unfamiliar with the product.

Employee Injuries

Like customer injuries, employees also encounter instances that put them at risk of injury while working. For example, many employee injury claims result from slips, falls, and muscle strains. Slippery walkways and heavy equipment can increase the risk of slips and falls—especially if loading heavy equipment requires maneuvering stairs or steep inclines. Muscle strains and back injuries also occur from repetitive motions and lifting heavy equipment.

Employees who set up, tear down, and deliver equipment have an increased risk of injuries while performing these services. Also, employees could be injured in car accidents while delivering equipment.

Car Accidents

Party rental businesses that deliver equipment to a customer’s location risk car accidents. Drivers may operate large vehicles, box trucks, or haul trailers to deliver larger equipment. These vehicles pose an increased risk of poor visibility or difficulty maneuvering—especially on narrow, steep, or uneven driveways.

Certain driving conditions also increase the risk of car accidents, including driver fatigue, poor visibility, traffic, distracted driving, and driving in unfamiliar areas. Further, delivery drivers may also drive at late hours to accommodate tear-downs of evening parties, which increases the hazard of car accidents.

Hiscox.com

What Types of Insurance Policies Should a Party Rental Business Consider?

A party rental business faces many hazards in its everyday operations. As a result, insurance becomes an important tool in protecting the business from financial harm that accidents can cause. Some of the key insurance policies a party rental business should consider include:

  • General liability insurance
  • Business interruption insurance
  • Workers’ compensation insurance
  • Commercial automobile insurance

General Liability Insurance – Premises and Operations

General liability for premises and operations offers coverage for claims of bodily injury or property damage that happen on-site or result from the party rental’s operations. For example, injuries from slips and falls are covered by a premises and operations liability policy, as are injuries or property damage resulting from loading or equipment demonstrations.

Expenses from an accident quickly add up, but fortunately, a general liability policy covers many claim costs, including:

  • Medical payments
  • Property damage repairs
  • Legal defense costs
  • Settlements 

General Liability Insurance – Products and Completed Operations

Products or completed operations liability insurance offers coverage for bodily injury or property damage claims that occur directly from using the party rental’s equipment. For example, if the rented equipment ends up malfunctioning and causes damage to the customer’s property, this line of coverage covers the claim.

In addition, general liability coverage protects from circumstances that occur due to the party rental’s provided services (i.e., set up, operation, or tear down of the equipment). Like premises liability coverage, this liability coverage also covers the costs of 

  • Medical bills
  • Property damage repairs
  • Legal fees
  • Settlements

Business Interruption Insurance

A business interruption insurance policy offers protection for expenses that result from a sudden loss of business. For example, suppose the party rental business loses its equipment supply. In that case, it risks breaking contracts with customers, losing future contracts, halting normal business flow, and putting employees at risk of lost income.

However, business interruption insurance protects small businesses from financial fallout after a loss. For instance, a business interruption policy covers:

  • Lost income
  • Coverage for employee wages
  • Payments on regular loans and bills
  • Coverage for temporary relocation

Business interruption typically provides coverage for 30 days. However, you can extend coverage for longer periods, usually for an added cost.

Workers’ Compensation Insurance 

A workers’ compensation policy covers employee injuries. For party rental businesses, employees may be injured while working on-site, in car accidents, during deliveries, or during set up and tear down. Since a personal injury can result in costly medical bills and a loss of income for the employee, a workers’ compensation policy is essential to cover the employee’s bills and protect the business from lawsuits.

Various expenses that are covered by a workers’ compensation policy include the following:

  • Medical bills
  • Replacement of lost income
  • Ongoing rehabilitation care
  • Disability income
  • Funeral expenses

Commercial Automobile Insurance

Commercial auto insurance covers car accident liabilities and physical damage protection for business-owned vehicles. More specifically, auto liability insures at-fault accidents and pays for third-party bodily injuries and property damage up to an agreed policy limit. Added coverages include uninsured motorist coverage and medical payments for the insured’s injuries.

The physical damage portion of a commercial automobile insurance policy covers business-owned vehicles for collision and non-collision damage. Non-collision coverage includes hazards such as falling objects, vandalism, theft, wind, and hail. Physical damage coverage insures vehicles up to their value at the time of loss and typically includes a deductible.

How Much Does Party Rental Business Insurance Cost?

The costs for party rental business insurance will vary depending on the level of insurance coverage required. For instance, automobile insurance is likely unnecessary for a party rental business that doesn’t offer delivery services. Additionally, the number of employees and the type of equipment rented will also influence the cost because these factors alter the amount of coverage required and the level of risk exposure.

Insurance companies consider many factors in determining coverage amounts and pricing. In addition to the number of employees and type of equipment rented, insurance companies may also consider:

  • The size and condition of business-owned structures
  • Maintenance and condition of leased equipment
  • The number, type, and value of vehicles needing insurance
  • Employee training and certification
  • Any past or current lawsuits or insurance claims

The most effective way to determine rental insurance coverage costs is to get quotes from multiple insurance brokers. Since each insurance company offers different bundle discounts, coverage limits, and deductible options, you’ll be able to choose the best policies for your business by comparing multiple quotes.

What Types of Insurance Does a Party Rental Business Need?

What Types of Insurance Does a Party Rental Business Need?

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