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Renting cars in another state: Insurance coverage issues for Michigan residents

Our attorney says it’s best to purchase the “optional” insurance coverage offered by out-of-state rental car agencies

When it comes to renting a car in another state, our auto accident attorneys will almost always recommend purchasing rental car coverage. But it’s a good idea to call your insurance agent before a trip, to see how your No-Fault policy applies in case of an auto accident. There are more than 100 auto insurance companies in Michigan, and each policy is different.

Most rental car companies offer customers the option to purchase additional insurance coverage such as:

  • Collision coverage,
  • Personal accident insurance, and
  • Supplemental liability protection.

Most of the time, your Michigan No-Fault auto insurance is not enough in the event of a car accident in a rental car in another state.

The risk of relying on your Michigan No-Fault policy when renting a car in another state

First, the good news. If you have Michigan No-Fault insurance coverage, you can collect No-Fault benefits — currently the nation’s best — if you are injured in an out-of-state car accident.

But the risks of only relying on your own Michigan-No Fault insurance policy and not purchasing the additional rental coverage are many:

  1. Collision damage to the rental vehicle: With most No-Fault policies today, there is an open question on whether damage to a rental car will be covered by your own auto insurance policy, even if you have purchased collision coverage for your Michigan vehicles. In many cases, renters are not appropriately covered and should purchase the additional insurance to minimize the risk. Even if a car accident is not your fault, you don’t want to get stuck with a $20,000 bill for vehicle repairs.
  2. Uninsured and underinsured motorist coverage: Our accident attorneys strongly recommend everyone carry uninsured and underinsured motorist coverage in case of a car accident with a driver who does not have auto insurance. These important coverages may not transfer over to a rental car if you become seriously injured in an out-of-state car accident.
  3. The possibility of a reduced bodily injury coverage that can leave you personally exposed: The RBI (residual bodily injury coverage that your policy would pay for if another person is injured in a car accident that you caused) may be reduced to the minimum bodily injury requirements of $20,000.
  4. Rental car insurance policies are deliberately written to be confusing: In general, as with most insurance contracts, rental car insurance policies are filled with confusing language and red tape. They also include many exceptions and exclusions that, combined with the exceptions and exclusions of your Michigan No -Fault policy, have been the subject of many seminars for lawyers and insurance adjusters on what is and isn’t covered.
  5. Insurance policies and contracts for rental cars change often: If you’re on the fence, it’s safest to assume with rental cars that your own Michigan No-Fault policy will likely be deficient and will not protect you fully if you’re involved in a car accident in a rental car out of state.

Here’s some advice on renting cars in Michigan.

Call a Michigan Auto Law at (800) 777-0028 or fill out our free consultation form. We’re here to answer all of your questions, and there’s absolutely no charge or obligation.

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