During the holiday season, many of us are traveling to visit family and friends and may need to rent a vehicle. A common question is if your auto insurance also covers a rental vehicle. The answer is maybe. There could be some gaps in coverage between the auto rental agreement and your Personal Auto Policy (PAP). Some things to consider are listed below:
Rental Agreement: The first item to look at is the name on the rental agreement. You need to be sure the person listed on the agreement is a covered person on your PAP. For example, if you are using a company credit card and renting the vehicle in the company name, your PAP would not provide coverage.
Loss Valuation: The rental agreement may obligate you to reimburse the rental company for the “full value” of the vehicle which is determined solely by the rental company. Your PAP is only obligated to pay the lesser of the “actual cash value” of the vehicle or the amount “necessary to repair or replace the damaged vehicle.” Also, a PAP does not pay for any “betterment” (increased value of new parts replacing old ones) of the vehicle, nor any “diminution” of value (if market value of the vehicle after repairs is less than that before the accident).
Indirect Losses: The rental agreement may require payment for the loss of rental income during the time the vehicle is being repaired. Your PAP may have limited or no coverage for this indirect loss.
Administrative Expenses: The rental agreement may state that various “administrative” fees or expenses must be paid – these could include towing, storage, appraisal and other related fees. Some of these expenses may not be covered by your PAP.
PAP Conditions and Exclusions: All conditions and exclusions of your PAP will apply to the rental vehicle. This may include driver exclusions, territory definitions or excluded vehicle types. Any physical damage deductible that would apply to your vehicle would also apply to the rental.
Future Costs: Payment by your PAP for any damage to a rental car may result in a premium increase via surcharges or loss of credits to account the same way it would if you had a loss with your regular use vehicle.
When renting a vehicle, keep these possible “gaps” in coverage in mind. You can then make an educated decision as to whether or not to purchase the coverage from the rental company or rely on your PAP for coverage. Questions about your PAP or in search of a new policy? Contact Univest Insurance at 800-220-3077. We can provide a custom, no obligation quote.
Insurance products offered through Univest Insurance, Inc., a licensed insurance agency affiliate of Univest Corporation, are obligations of and underwritten by unaffiliated insurance companies. They are not insured by the FDIC or any other agency of the United States and are not deposits of or guaranteed by any bank.