When it comes to your auto insurance coverage there are many different options that are available to you and many of them may be completely foreign in nature. The idea of liability coverage or uninsured motorist coverage may seem strange, but the idea of rental car coverage is much more basic. However, many people still get tripped up in the details of rental car coverage.
What will be discussed here is both the coverage that you purchase to provide you with a rental car when your car is not drivable and the coverage provided to you for when you are driving the rental vehicle. These are in fact two very separate things that should be understood and discussed on a different level, so getting started is rather easy for us.
The Difference Between the Two Rental Car Coverage Options
What is confusing is that rental car coverage is assumed to all be tied up into one thing, but these types of coverage are completely separate. One is commonly referred to as “loss of use” coverage and it does exactly that when you purchase it. This coverage provides you with the use of a rental vehicle when you lose the use of your primary vehicle. This coverage is purchased separately from others and usually comes with a daily and overall limit.
The other type of coverage is what provides insurance coverage to you when you are driving a rental car. This is typically covered under the liability, collision and comprehensive portions of your policy. What we will discuss in detail later in the article is when your rental may be covered and when it may not as well as the coverage options that may be available to you.
First, let’s talk about loss of use rental car coverage.
Understanding Loss of Use Rental Car Coverage
If you have purchased loss of use rental car coverage for your policy you have made a good decision as this is sure to get you out of a pickle at some point in time. What this coverage does is provide you with a rental car in the event your vehicle is not drivable after an auto accident, hail storm, vandalism, etc. In other words, in almost all instances except general wear and tear you can get a rental car if your vehicle is in the shop or totaled.
Two general types of coverage generally are available, though both are not always available from every insurance company. One provides you a total amount of money to use regardless of how much you actually use while the other merely reimburses you for what you had to use. Reimbursement coverage will pay for three days if three days are used, but no more, while the other will pay you out your full allotment regardless of what you use.
Obviously, it is much cheaper to buy reimbursement coverage but you don’t always have a choice between the two depending on the insurance company you choose. In both situations you are given a daily limit and a total limit that cannot be exceeded or if it is exceeded you are the one to pay for it.
For example, if you have coverage that provides $20 per day and $500 total you can use up to $20 per day for 25 days when your vehicle is not usable. If you rent a car that costs $25 per day then you will pay for $5 per day out of your own pocket. If you use the coverage for 5 days then you can get a total of $100 if you have reimbursement coverage. If you have full rental then you will get the total $500 and you can do what you want with what you have left.
What Happens if the Other Party is at Fault for the Accident?
Many people get confused on rental coverage if the other party is at fault because it is the other party’s fault that you don’t have access to your vehicle. The basic reason for insurance is that it gets you back to where you were before your covered loss. This is true also of liability insurance coverage and your rental car will be covered by the responsible party’s liability insurance.
If the other party carries BIPD (liability) insurance coverage then the rental you need will be paid from the PD (property damage) liability coverage. In addition to the repairs to your vehicle being paid for you will be provided a rental vehicle for the time that your vehicle is being repaired. You won’t get the rental for any longer than that or any shorter than that because if the accident hadn’t happened you wouldn’t need it.
With insurance you are expected to be fulfilled and returned in whole to where you were before the accident. There is no profiting from the loss and there shouldn’t be any real suffering either. This is all a part of the auto insurance game and should be covered as such when your vehicle is damaged by someone else.
What is NOT Covered by Rental Car Loss of Use Coverage?
Rental car loss of use coverage, be that from your own policy or someone else’s, does not cover a few things that may be of interest to you. You will still be required to pay for your own gas and for any additional insurance that you choose to carry on the rental vehicle. Also, you may have to pay a deposit to ensure that the bill will be paid, for which you will be credited down the line.
The reason for gas and insurance not being covered is because those are things that you would have to pay for if you were still driving your own car. You are not supposed to profit from the use of insurance, just be restored to your previous condition. To do this you cannot be reimbursed for gas or insurance coverage that you would have had to pay anyways.
The deposit is something that the rental car company requires, not the insurance company. Any issues with that charge should be directed to the rental car company, not the insurance company.
What About Insurance Coverage for the Rental Vehicle?
When you are driving a rental vehicle much of the auto insurance for your primary vehicle should be transferred over to the rental. There are different things to think about with this, but in essence you shouldn’t have to purchase additional insurance unless your policy dictates that you do. Here are a couple of coverage items to think about when driving a rental vehicle.
a.) Liability Coverage
Generally most auto insurance policies will transfer the liability coverage from the primary vehicle to the rental vehicle in instances where the rental is replacing the primary vehicle. This isn’t in all instances as a rental vehicle used for a vacation is not a substitute vehicle but is instead a pleasure rental vehicle. This should be addressed with your agent to see when your coverage would apply.
b.) Collision/Comprehensive Coverage
The coverage for the repairs to your own primary vehicle may not transfer as easily to your rental car. Many policies will require that you purchase additional coverage from the rental company if you want this to be covered. Don’t ever assume that this is covered and move on. Make sure that your rental car is covered when you are driving it just in case it gets damaged.
What are the Coverage Limits for the Rental Vehicle?
While your insurance coverage may extend to your rental vehicle it is not always clear how much will extend. You will have to read your policy or contact your agent to find out when and how your coverage will extend to your rental vehicle. Here are a few common ways that this works.
a.) The Best Available Coverage Method
The way that this method works is that the insurance coverage extends the best coverage on the policy to you when you drive a rental. So if you have two cars, one with a $500 collision deductible and the other with a $100 deductible you get the $100 deductible for your rental vehicle.
b.) The Aggregate Coverage Method
This is very uncommon, but the basic idea is that you average the limits on the policy together to come up with the coverage for your rental vehicle. In other words, if you have a $500 deductible on one vehicle and $100 on another you have a $300 deductible for your rental vehicle.
c.) The Direct Replacement Method
The basic idea here is that the coverage limits that exist on the vehicle that is being replaced are extended to the rental vehicle. If the vehicle being replaced had a $500 deductible so does the rental vehicle and that is the end of the story.
Knowing which type of coverage you have available to you will help you avoid a lot of stress and frustration when a claim arises.
What are Your Responsibilities When Driving a Rental Vehicle in an Accident?
When it comes to driving a rental vehicle in an auto accident your responsibilities are the same as any other accident to the other driver(s) involved in the accident. Give them your primary insurance information and let them know that you were driving a rental vehicle at the time so there is no confusion when the claim is filed.
As for the claim involving the damage to the rental vehicle your responsibility is to report the claim to your insurance and the rental company. You are not responsible for making sure the repairs are completed, just for notifying the insurance and rental companies involved. This allows them to get started on hashing out the details related to coverage and repairs in due time.
What is Important About Rental Car Coverage
The important part of rental car coverage is that you know what you have available to you on your policy. Loss of use rental car coverage can cost as little as a few dollars a month and is worth the small investment. Coverage for the rental you are driving is likely there if you have full coverage, you just need to know what you are legally entitled to.
This is important to know when you are starting your policy online or in person with an agent so you can make sure you are getting the coverage options and limits that you need. Not knowing the coverage you have available to you can cost you a lot of money and potentially wind up with you in court trying to explain your circumstance. Keeping rental car coverage, in both situations, can make your life much easier and give you a peace-of-mind that is vitally important in life.