TUESDAY, SEPTEMBER 6, 2011
by Ed Sneneh, Illinois Auto Insurance Agent
People want to know if their auto insurance policy will cover them in the event they rent a car. Actually this is one of the most frequent questions.
There is no definitive answers to that question. If you are interested in knowing whether or not you are covered you need to contact your agent, or even, better, your company. The following are certain points worth discussion.
1. Some policies will cover the rental vehicles for liability insurance. Car insurance policies that normally covers rental vehicles are policies that are issued according the guidelines of the Insurance Service Office (ISO). Since car insurance companies are not obligated to follow the ISO guidelines when it comes to Personal Auto Coverage, many non standard companies will issue their policies excluding the extension of liability coverage to renal vehicles, unless the customer's (insured) vehicle is in repair because of a covered loss (ie the rental vehicle is a substitute car.)
2. Similar rules apply to comprehensive and collision coverage. This means that whether you have it or not it depends on the company you are dealing with. But even if you are dealing with a preferred auto insurance company you will have no comprehensive and collision coverage on the rental auto unless you have similar coverage in your policy on one of the vehicles you are insuring. Also, your protection on the rental vehicle is limited to the value of the most valuable vehicle that you have insured for comprehensive and collision. Example: If you have comprehensive and collision coverage on a 2001 Honda Civic, with a market value of $3,500 and you decided to rent a 2011 Mercedes S500, then your protection on the rental Mercedes is only $3,500!
It is clear that the lack of a true standardized policy that all insurance companies adhere to, and the use of what customers call 'vague language' in some contracts are the main reasons behind this confusion. Some people rely on assumptions that their policies do or do not cover specific situations. The coverage offered under your friend's auto insurance policy with Company X is not the same coverage that you have for your auto insurance with Company Y!
Reading your policy can assist you, and can save you lots of unwanted aggravation and pain. If you are a frequent user of rental cars purchasing a non-owner auto insurance policy may help. Just make sure that you are not using the rental car to conduct business, because personal non owner will not cover any liability resulting from using the rental vehicles for business purposes. If you have a business, your business policy may provide coverage for hired and non owned auto, so you may need to check your business policy. If you can afford the additional cost for insuring the rental car this may be the most convenient (and less heart aching) choice.