This is the first post in a series of misunderstood issues in the insurance world.  One of the most commonly asked questions we receive is regarding coverage for a rental car that is not required due to a covered claim.  You know - you're on vacation and when you go to pick up the rental at the airport, they want to charge you an arm and a leg to insure the vehicle!  The answer to whether you're already covered is yes... and no.  Here's what you need to know:

  1. Most personal auto policies provide coverage for a temporary substitute vehicle.  But be careful:  If you only carry liability coverage on your owned vehicles, you likely won't have coverage for damage to the rental car itself - only for liability for anyone or anything that you might hit while driving the rental.  You need Comprehensive and Collision coverage on at least one of your vehicles in order for this coverage to be extended to a temporary substitute.
  2. Even if you do carry Comp and Collision, any damage to the rental will be subject to your deductible.  So if you carry a $500 deductible and you're in an accident, you will be responsible to the rental agency for the first $500 of damages just as you would if it were your own vehicle.
  3. Make sure you're carrying adequate liability limits.  If you're driving in unfamiliar territory in an unfamiliar vehicle, the chances of having an accident are greater - especially if you're trying to follow a GPS.  If you were to cause serious injury or death and your liability limits are too low, the rental agency could come after your assets if you don't have enough coverage to pay the judgment that would likely be levied against both you and them.  This could vary by state, so check with the rental agency to see what the provisions of the rental contract are in this regard.
  4. Similar to Comp and Collision, most insurance carriers will provide towing or roadside assistance on the rental if you carry it on your owned vehicles.  If you a member of a motor club instead, check with them to see if your coverage follows the member or the vehicle and whether or not the plan would cover a substitute vehicle such as a rental car.
  5. The one thing that most personal auto policies do not cover is Loss of Use.  This means that if you have an accident and the rental car is out of commission while being repaired, the rental agency can charge you for their loss of income from the vehicle not being available for rent.  Generally, they will have a hard time making this stick if there are other comparable vehicles in their fleet that sat idle at the time the vehicle was not available, but if their vehicles are all booked up, you can expect them to charge for this.  Some carriers will cover this charge if they are in fact renting at capacity.  Other carriers will cover the charge if you carry Rental Reimbursement on at least one of your owned vehicles.  Check with your agent if you're unsure what your carrier covers.

If you don't have the coverages listed above or if your coverages are inadequate, then you should purchase the coverage offered by the rental agency.  Keep in mind that most agencies offer each type of coverage separately, so if you only need one of these coverages, you shouldn't need to purchase all of them.  If you've run into a problem in one of these areas before, our readers would love to get your insight.  For answers to other frequently asked questions regarding insurance coverage, check out the FAQ page of our website or give us a call at (419)207-1111.

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