Car Rental Accident and Collision Insurance
Posted: Thursday, March 12, 2009
by Richard Edmunds
Car Rental Guide
Rental car companies offer customers the option to purchase additional coverage such as collision damage coverage, personal accident and supplemental liability protection. Spending the few extra dollars for additional indemnity coverage can be a prudent decision that can save you many thousands of dollars if you were ever involved in a serious car accident while renting the vehicle. Purchasing additional rental car insurance can even be a good idea if your rental car is covered under your own personal policy
As part of your investigation, verify that your policy will pay for an accident resulting to a vehicle you rent out of state. Some policies are very specific to the state they are written for and coverage for collision damage (damage to the vehicles being driven by either party), bodily injury (money that your policy would pay for another person injured in a car accident that you caused) may be reduced or eliminated. Additionally, important personal coverage (coverage to you if you become seriously injured in a car accident) within your policy such as uninsured and underinsured motorist coverage, may not transfer to an out of state rented vehicle.
There are other important gaps in coverage that often occur to the detriment of the insured. For instance, if you drive an older car, you may not be carrying any collision coverage. Therefore when you rent, your coverage could be terribly inadequate. Also, if you have entered into a long-term lease or rental agreement, some states assume (in a legal sense) that you have temporary ownership. In the advent of a car rental accident, you could be left holding the bill.
The credit card you use to secure the rental vehicle will often provide accident coverage. However this is secondary rental car collision coverage and will only reimburse you or the rental agency on an excess basis. The card company pays only after any amount due from any other agency or any other form of reimbursement has been paid. Note that no credit card provides coverage for liability.
As stated before, it may be prudent to purchase the additional coverage even if your policy covers rentals. Rental companies have standard clauses that state there is no cap or limit on your liability resulting from any use of the vehicle. When you rent a car, you are responsible for all damages regardless of fault, including physical damages, loss of use, and diminution of value and administration fees. Your primary carrier will have upper limits on what they will pay.
There is an ongoing battle between rental agencies and primary insurers with you caught in-between. In many states, law requires a vehicle owner's private carrier to provide primary coverage in all cases. However, the primary insurer's attorney will argue that the laws are inapplicable to rental vehicles because their business is governed by a set of statutes specific to rental cars. The insurer will only pay for the physical damages of the vehicle leaving you to pay the rest of the charges on the claim. In the courts, both sides have won. This in the end tends to indicate that being covered from all angles is probably the smartest thing you can do.
A car rental accident need not be an overwhelming financial burden. Although in today's market almost every agreement you sign will include extra fees, taxes and other add-ons, the small sums required to gain the additional coverage for a rental vehicle seem well worth the expenditure.
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