Every year, millions of people across the country depend on car rental companies to help them get around. Thanks to these businesses, people can get a car to use temporarily when their usual car isn’t available. Rentals of other types of vehicles like limousines and party buses can also help people make special events even more memorable. But as the coronavirus pandemic hit the United States, vehicle rental companies saw their business levels plummet at a time of year when business is typically strong.
What COVID-19 Meant for Car & Limo Rental Companies
Vehicle rental companies are strongly tied to two industries that have been hit particularly hard by the coronavirus pandemic: travel and events.
The Los Angeles Tourism & Convention Board reports that 50 million tourists visited Los Angeles county in 2018 and when people travel, they very often rent cars to use on their trips. But with so many people forced to cancel their travel plans because of the pandemic, car rentals dropped substantially. Reports from Los Angeles World Airports show the monthly gross revenue (after exclusions) from car rentals at LAX totaled $68.1 million in March 2019, $71 million in April 2019, and $65.9 million in May 2019. But in 2020, those numbers dropped to about $34.5 million in March, $4.5 million in April, and $7 million in May. While those numbers don’t account for car rentals at other locations, they represent just one way a loss of tourism has impacted our local economy.
Not only was there a loss of business from tourists, people had less of a need to rent cars for other reasons. For example, if a person’s car needs to be left in the shop for a few days for some repairs, they might rent a car to help them get around during that time. But with stay-at-home orders in place, many people have either been putting off unnecessary car repairs or deciding against renting a car because there were so few places to go.
Sometimes, when people want to rent cars, they also want someone else to do the driving for them. For special events like weddings and proms, limo rentals are very often part of the festivities. But with so many proms and weddings either being cancelled or postponed meant limo rental companies lost out on a significant amount of business during what is normally a busy season. Cancellations of concerts, sporting events, and birthday parties also meant that rentals of vehicles like party buses have taken a hit and it’s not clear when fleet owners can expect business to return to normal.
Business Interruption Insurance for Car & Limo Rental Companies
Business owners can find themselves in the position of not being able to conduct business for many different reasons. For example, in the case of car or limo rental companies, their fleet could be damaged by something like a storm or natural disaster. To protect themselves in these types of situations, business owners commonly purchase business insurance policies that include business interruption coverage or civil authority coverage.
Business interruption insurance is a type of coverage that helps policyholders handle monetary losses they might encounter during a temporary closure, such as lost revenue, lease/mortgage payments, employee payroll. Relocation expenses could also be covered if a business could resume operations at a different location. Civil authority coverage also covers monetary losses during temporary business closures, but specifically applies if a business is forced to close because of a government order.
Unfortunately, just when business owners need these types of benefits, insurance companies are very frequently denying their claims, often without properly reviewing them first. Some business owners have reported that their insurers have tried discouraging them from even trying to make a claim.
Help with California Business Interruption Claims
If you’ve made a claim for business interruption benefits and been denied, you definitely are not alone. It also doesn’t necessarily mean you’re out of options. Insurance companies have a vested interest in paying out as little money as possible and are not always looking out for your best interests.
With so many business interruption claims coming in right now, insurers are all too eager to say no for any reason they can think of. But at The Wallace Firm, our team has experience taking on insurance companies and holding them accountable. If you’re a California business owner, we can help you with your claim, whether you’ve already made a claim and been denied or if you’re getting ready to make your claim. Contact us today to get started.