Rental fleet operations carry an inherent advantage over other fleets when facing the threat of natural disasters.

If the business is going well, most of the cars will be rented out at any given time and will likely be parked and driven across a wide region. That means fewer vehicles that operators need to move out of the way from a central location as a disaster looms or strikes.

That works well on the East Coast, too, where hurricanes are most common.

“We handle a lot of hurricanes, so we have some time for preparation, but with the wildfires, you don’t have as much time to get people out,” said Mark Plousis, senior vice president of Philadelphia Insurance in Bala Cynwyd, Pennsylvania. “Timing is the issue. If the fleet operators have enough time, they can react and get their cars to a safer spot.”

Some wildfires, like the Pacific Palisades and Altadena fires in Southern California on Jan. 7, 2025, roar in too fast to move fleets, but in other situations, a longer-burning wildfire can be tracked, and its path predicted based on winds, allowing people and equipment to escape. 

Citing extreme weather events, Plousis said people often “need to rent cars to leave.”

“We always feel better when a lot of the rental cars are rented and moved out of the area,” he said. “Many people who don't have a car or access, rent one. So that's always been a positive for us.”

More Informed Risk Areas

Technology and accumulated experience with more disasters enable insurers to categorize zip codes based on catastrophic potential.

Those ratings can help inform rental fleet operators of risk levels and the related precautions and plans to pursue, not just for their facilities and fleets, but for car renters in real time.

“Let’s say you rented a car to John Doe, and he lives in a certain zip code, and it's one of the zip codes that's potentially impacted,” Plousis said. A rental operator can call the customer to advise them on where to pick up or return the car.

“It can be hard for fleet operators with a 70% or 80% fleet usage rate where the vehicles are all out,” he said. “It’s the ones on rental where you don’t actually know where they are,” beyond the information the car renter provides. 

One solution is to equip rental vehicles with telematics and/or tracking devices for use during emergencies.

For unused rental cars parked on lots or being turned over, a rental fleet operation should maintain an updated plan to move vehicles to safer locations in the event of an impending natural disaster, Plousis advised.

Rental fleet operations can contract with third parties to arrange space on parking lots and in garages away from vulnerable areas in the event of a major storm, possible mudslides, or red zone high fire risks. 

Operators can also offer to reimburse parking rates for parked rental cars.

“Rental cars are best placed out of harm’s way because most rental car operators usually self-insure their physical damage,” Plousis said. “Although we cover liability for a lot of people, cars create significant exposure for rental operators.”

Car Renter Safety and Awareness

Rental fleet companies should also consider creating safety checklists and reference materials for car renters, advising them on how to avoid natural disaster areas or how to protect themselves during a sudden event, such as an earthquake. It could also provide steps to protect or move a rental vehicle.

“I believe in a lot of prevention to mitigate risk,” Plousis said. “That checklist can help someone in a situation. What is the cost to print a piece of paper and attach it to a rental agreement?” 

However, remember that car renters don’t own the car, so they may not show as much urgency in protecting or guarding a vehicle that isn't theirs, he added. Providing simple instructions and reminders that focus on both personal safety and common-sense car use can incentivize renters to do the right thing.

Locations Vary In Risk Levels

Plousis underscored the number-one factor in risk mitigation and business protection: “Location, location, location.”

However, even if you can pinpoint risk factors to specific local areas and zip codes, natural disasters have occurred more often in places where they were rare, Plousis pointed out.

“People need to be more aware of their locations and the propensity for losses,” he said. “In Japan, they didn't get hit with hail for 25 years, and then they had two major hailstorms that happened in two years in a row.”

Risk maps in the U.S. have shifted due to more frequent storms and natural disasters across broader areas, he said. 

The Pacific Palisades fire, for example, was a sudden, unexpected catastrophe in a coastal area that never experienced such a rapid fire of that magnitude. That’s why brush fire ratings at that time were not relevant.

The same phenomenon occurred in the Lahaina, Maui fires of August 2023.

“If you plan to operate in certain areas, you should have a good idea of what can happen there,” Plousis said. “You can no longer assume ‘it will never happen here.’ It’s all changed drastically.”

Rental fleet operators should work closely with their insurance carriers to update their coverage in line with the latest trends in natural disaster risks and areas prone to them.

Likewise, rental car companies looking to open new outlets or facilities should not choose areas at higher disaster risk or relocate to safer areas.

While spreading out fleet vehicles can reduce risk, operators should also ensure they do not offset that structure by inadvertently moving vehicles into higher-risk locations.

Layered Insurance Coverage

Rental fleets generally arrange insurance across multiple tiers for specific purposes. Plousis outlined six key areas:

1. Liability insurance covers the car renter. 

2. Owner-only excess insurance protects the company.

3. Physical vehicle damage can be self-insured and offered as a purchased CDW (collision damage waiver) option to car renters.

4. Catastrophic comprehensive (catcomp) protects fleets during large-scale events.

5. Property insurance covers facilities.

6. Flood and earthquake coverage may require separate policies, depending on locations, and is generally sold through state governments.