Supplemental liability insurance (SLI) is one of the best products introduced by the vehicle rental industry in the past two decades. Customers obtain liability insurance up to $1 million, rental companies earn income, and insurance carriers (most of which also write basic liability insurance) earn premium.
Like many other aspects of the rental business, the sale of SLI is regulated in most states. The regulations come from state insurance departments. Some states, in fact, require a special limited license to sell SLI (see accompanying chart).
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The chart also shows seven states where you need no license (exempt states), as well as three jurisdictions — Washington D.C., New Jersey and Vermont — where it may not be lawful to sell SLI because there are no laws that expressly allow the sale of SLI without a general agent's license. That could include roadside assistance and other inventive products.
The products you can sell under each state's limited license law vary. Florida, for example, permits you to sell only SLI, personal accident insurance and personal effects coverage. Some state laws, including one in Georgia, permit the sale of any insurance product reasonably related to the rental. The length of the rental may affect your right to sell. The limited license may apply only to rentals of a specific number of days or less.
Many states require that your employees receive training on the types of insurance you sell. Your broker may provide training. Some states require a state-approved training program.
Some states, including North Carolina, require that employees selling optional insurance products must be salaried employees and they cannot receive commissions. Other states, including Illinois, prohibit commissions but permit rental companies to include SLI sales performance in the determination of overall employee compensation.
It's essential that you give a copy of the SLI policy, or a brochure that summarizes the terms of the policy, to each renter who purchases SLI. In the past 12 months, Wisconsin and Florida cases have denied the SLI insurance carrier the right to invoke policy exclusions when the renter didn't receive a copy or summary.