Rental Car Insurance and Responsibility or: Let’s Play ‘Who Pays Shelley?”

Shelley, who recently went on a business trip, rented a car as she normally does for all he business trips. She paid using her American express card and chose to go with the rental agencies auto insurance. A couple of days later, Shelley had an accident that caused a significant amount of damage and sent her and her passenger to the hospital. Now that they are recovering, the question of who should pay the damages has come to the surface but is really isn’t so cut and dry. Since Shelley travels a lot, she also has American Express’ rental car coverage and she also lives in a state that requires rental car companies to cover at least the state liability limit. For Shelley, it can be hard to know what the next step is but we should take a step back and look a little bit in depth about what exactly happens when we rent a car.

Knowing who pays could depend on a number of things. The driver may be a big factor depending on the agreement with the rental company and another big factor to consider is state law. In some states, rental car companies are required to assuming a minimum financial risk when it comes to bodily injury, but not necessary damage. Your personal policy may also be a very important factor because if your personal auto policy is non-existent or lacks the amount of coverage the rental car requires, you may need to check what kind of offering the state and your credit card have.

Always check with your personal insurance policy to see if it will cover a rental. As for injuries and property damage, you are normally covered up to your liability limit. Any kind of damage that happens to the rental car, whether you cause it or not, may not be covered under you collision and comprehensive coverage. Any damage of course will be subject to your deductible but if you don’t have collision or comprehensive, you may have to check to see if you can get a waiver from the rental company. And as far as lost income of the rental company goes, that is if you decide to trash the car, most personal policies will only cover loss of use on one vehicle but it’s going to be hard for a rental company to get this payment out of you. If they have other cars on the lot, it’s hard to prove that they have lost income.

While this can be an expensive option and may not offer the most comprehensive form of coverage, it is still recommended that you purchase this option if your personal auto policy does not include collision or comprehensive. The CDW can also come in handy when you are trying to protect your personal auto insurance rates. If you file a claim under the CDW from the rental company, you won’t see an increase in your personal claims. But you should probably try to drive as safety as possible, especially if you are in a car that isn’t yours.

In the initial scenario, Shelley used her American Express card to also insure her rental card and there is nothing wrong with that but it can come with restrictions. Make sure that it provides primary coverage, which means that it will regardless of your personal auto insurance policy and that is has no exclusion which could end up hurting you.

Ultimately, the rental coverage would cover up to that limit and then her personal auto policy would step in to take care of the rest. Renting a car may not always be this complicated and hopefully is a pleasant experience but if you know that you are going to be renting a car, it never hurts to ask for a sample policy so that you can go over it with you insurance agent to make sure that is assumes first liability before any other coverage. With the okay from your insurance agent, you should be able to enjoy your vacation in style.