We're here today to answer the age-old question, "Does my Auto Insurance Cover a Rental Car?"
The answer is not straightforward as you can imagine.
If the Personal Auto Policy (PAP) provides coverage to rental cars on an excess vs. primary basis lies in state law.
Liability: If state law requires the rental car company to provide liability coverage to the renter, the PAP is excess over the rental company's coverage. If, however, state law does not require the rental company to extend coverage to the renter, then the liability coverage provided by the renter's PAP is functionally primary because of the contractual language in the agreement.
Physical Damage: The renter's PAP is contractually primary unless state law does not allow such transfer to the renter. It is unlikely most states address physical damage.
One last point to keep in mind, even if the rental company is statutorily required to provide liability coverage, it is only required to provide state minimum limits (as is stated in the rental agreement).
Conclusion
All auto insurance policies are not created equal, despite what you might be led to believe by some “low-cost” auto insurance advertising. In particular, coverage and claims practices for the use of non-owned auto like rental cars can vary dramatically from one insurer to another. Equally important, virtually all rental car companies draft their own rental agreements and can make charges and assessments that are not covered by any auto policy. Although damage waiver fees are generally considered outrageous, most consumers should consider purchasing the waiver for short-term rentals.
That very last statement is very important and worth repeating...most consumers should consider purchasing the waiver for short-term rentals. There are several charges not covered in the PAP policy ex. Loss of Use (the daily rental while the car is being repaired). Some carriers do provide rental car coverage, but they are specific to the auto carrier. Not all provide the same coverage and understanding the coverage you are carrying can create a gap in coverage during a time in need.
Long story short, we suggest that the client purchase the coverage from the rental agency.
If you're still confused or have more questions, please reach out to us. 910-762-8551.