This is probably the number one question we get from clients. If you have a standard Auto Insurance Contract there is some coverage that will extend and there are some that do not.
1) Rental car company is trying to sell me liability coverage, do I need to buy it?
Answer - you don't need to buy the liability coverage offered by the rental car company. Under the Liability Section of the standard auto agreement (Part A - Liability, B.1-4) the policy does extend to any auto that "you" or any "family member" are using. Key phrase is "any auto," which allows you to rent a U-Haul box truck or renting a car.
2) State that you are renting from is a "No Fault State" and your policy is a standard Indiana contract based on "Comparative Negligence." Rental Car company is telling us that our policy isn't valid.
Answer - False, you have coverage. Part A - Out of State Coverage stipulates that your policy in Indiana will automatically change when you cross into another State and interpret the laws as required by that State.
3) Does my insurance provide coverage if the car I rent is wrecked or stolen while I have it?
Answer - Maybe..... If your insurance policy has at least one vehicle that is insured for Comprehensive coverage and Collision coverage you will have some, limited coverage. The problem is comparing what your insurance policy provides and what you just agreed to do with the rental car company. This is the problem and this is where we find "limited" coverage.
Auto insurance provides coverage outlined under Part D - Limit of Liability - A.1. It is clear that insurance will only settled claims on a vehicle on Actual Cash Value basis. Agreement you signed with the rental car company - you agreed to a new vehicle to replace the one you damaged.
Second issue is found under Part D - Transportation Expenses - A.2. If that rented car is damaged, or stolen the rental agreement states that you owe them loss of use (income) of the their vehicle. For years it was difficult for any of the major rental car companies to prove that all of their vehicles are rented out and that they really lost income. But now the courts are siding with the rental car companies because they can't rent out that specific car that another customer wanted because of size, model, color, etc. Under this section of your insurance the standard limit is only $20 per day for the rental car companies "loss of use." Most rental cars run from $35 to $45 per day and you would have to pay the difference.
Solution? Give consideration to buying what is called the "Collision Damage Waiver" (CDW) from the rental car company. If you damage their vehicle, and you have this in your rental agreement, you simply call them up and they have to bring you another vehicle and you are back on the road. If you don't have the CDW, you would call us, we get an adjuster to settle with the car rental company, you would have to pay an differences that your insurance doesn't cover to the rental car company. Also, you would not have a claim against your insurance and you most likely will loose any loss free credits you had earned.
4) Does the CDW provide coverage for all situations?
Answer - NO. Each rental agreement is different on what violates the CDW agreement. In fact some rental companies will have different language for each State. Some will state that the CDW is voided if you leave paved roads, you cross State lines, others if you break any laws (speeding, parked illegally, etc), still others are voided if someone is operating the vehicle that is not on their agreement to operate, etc. Key is to understand what the CDW is not covering.
5) Other issues?
Renting a car outside the United States - no coverage on your personal auto policy for operating your car outside the US, therefore renting a car would also be excluded outside the US
Business use of the rented vehicle should be addressed with your employer if you need to get the coverage or not. Commercial Policies are not as broad in language as personal auto policies. Without the proper endorsements for Hired Auto - there may be problems for both you and your employer. Remember that Personal Auto policies don't like business exposures and Commercial Auto policies don't like personal exposures.
You still have questions? Give us a call.