Car Insurance on Rentals
If you are renting a car, you may not be aware that your liability for an accident is contingent on the type of insurance coverage rented.
If you only rent a car for personal use, such as driving to and from work or going out with friends on the weekends, then your personal auto insurance will cover any damage to that rented vehicle. However, if you have a commercial driver's license (CDL) and rent an SUV to drive people around town all day long, then your commercial driver's license (CDL) insurance will cover any damage to that SUV from accidents.
If you hold a commercial driver's license with a passenger endorsement and your CDL insurance does not cover cars that you drive for personal use, then your personal auto insurance will not be able to provide coverage for any damage to the rented SUV.
When you rent a car for business purposes, even if your personal auto insurance policy covers rental cars, it may not cover damage done by you while driving something other than what your personal auto policy covers. You may need to add an endorsement or get a separate policy to cover this kind of situation. In the worst case, the car rental company may hold you personally accountable for any and all damages regardless of who caused it.
In this article, we'll look at some scenarios where adding an endorsement may be necessary.
What is the car rental liability law in California?
The car rental liability law in California is a bit complicated. It goes something like this: If you are renting a car to be driven off the lot, then you are probably covered by your personal auto policy. However, if you are renting a full-sized SUV to drive around all day long, then your CDL insurance will cover any accident that may occur while you are driving it.
If you own more than one rental property, and you are renting the same or different vehicles from each of them, then there may be some confusion as to who is responsible for accidents when the accidents occur off the store lot. If you have any doubts about this issue, then you should consult with an insurance attorney to make sure that your insurance coverage covers all of your vehicles even if they are all rented at the same time.
What is a renter's title guarantee?
A renter's title guarantee is a bit of an oddity in the car rental world. You may hear some people refer to it as "rental car insurance" or "damage waiver. " In general, it is a manufacturer's warranty which guarantees that the vehicle will be returned in good working order if you break the car down.
I am personally aware of one renter's title guarantee that requires the renter to purchase additional coverage as a condition for obtaining the title guarantee. Many other renter's title guarantees do not require this additional coverage; however, if you are a renter and have any doubts about your own renter's title guarantee, then you should consult with an attorney before buying any kind of insurance to protect yourself from personal liability.
What is limited rental car insurance? What kind of limits do they offer?
The most common form of limited rental car insurance is called "loss damage waiver. " It is fairly standard in all of the major auto rental companies. The policy holds the renter personally responsible for any and all damage to the car caused by an accident. Even if the renter's own auto insurance policy covers that type of crash, this form of limited insurance may be required by the car rental company to hold you personally accountable for any damages caused by that accident.
What is a third-party liability insurance?
A third-party liability policy provides additional coverage as long as you have a named insured on your own personal auto policy who has been approved by the insurance company. If that named insured is being held accountable for the accident as a result of the limited rental car insurance, then this policy will provide additional coverage.
The third-party liability coverage will pay the medical bills of any one injured by your accident and it will compensate them up to the limits of your policy. However, this coverage does not pay for any other damages done by your accident such as property damage. Depending upon your renter's title guarantee, you may still be responsible for paying those repair costs unless you have a separate title guarantee or a personal auto insurance policy which covers rented cars.
Can I get special car rental rates? In some cases, yes. All of the major auto rental companies have special rates for people with commercial driver's license endorsements. These rates are typically cheaper than the standard rental rates and they may only be available for an extended period of time. The hours of coverage (the number of days you can drive the car) may also be limited.
What is collision insurance? What does it cover?
Collision insurance is a great option in some situations because it covers some of the same costs as your own car insurance does without affecting your rate. It pays to check on your collision insurance coverages before you rent a car to make sure that it will cover any vehicle that you consume for personal use, even if it isn't covered by your own policy. When you rent a car, your personal auto policy will not cover any damage done to the rental car by you or anyone else who was in the vehicle with you.
Does my personal auto insurance policy cover rented vehicles?
In most cases, yes. If your renter's title guarantee does not require additional coverage from you, then your auto insurance will be able to cover the costs of repairs for damages caused by an accident. If your renter's title guarantee does require additional coverage on top of what your auto insurance already provides, then check with an insurance lawyer before doing anything to make sure that you are covered by all of these policies if something goes wrong.
What kind of policy do you need?
The first question you should ask yourself is what kind of policy do you even need. If you own more than one rental property, then you will probably want a separate policy to cover each vehicle. On the other hand, if all of your rentals are under one roof, then you may wish to consider adding an endorsement to your personal auto policy. In most cases, it will be up to your discretion as to which type of coverage is right for your situation.
Conclusion
After reviewing these suggestions, you should have a much better idea about how to go about renting cars in the future. There are several things to consider before you do anything such as checking with your personal auto insurance policy before anything else. Hopefully, this article has been helpful to you.
If you want to know how to rent a car safely and legally, then the following guide outlines all of the basics that you need to know about renting a car and everything you should watch out for.
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Car Insurance on Rentals