renting cars: should i purchase additional coverage?

Michigan auto accident attorneys find all too often that most drivers are unclear about whether or not they should purchase additional coverage offered by rental car companies.   When it comes to renting cars – especially when out of state – car accident lawyers will almost always recommend purchasing rental car coverage because of important gaps in coverage.   

Michigan Car Rental: 
Should I purchase the additional insurance coverage offered by rental car companies when I rent a car to drive in Michigan only?

Our lawyers have handled dozens of serious car accidents in Michigan that have involved rental car companies, and we have learned that spending the few extra dollars to purchase the additional insurance coverage offered to rent a car in Michigan is often a very wise decision, and one that can save you tens of thousands of dollars later if you are involved in a serious car accident.  Purchasing the additional car rental insurance is even a good idea if your rental car is covered under your own personal policy of Michigan No Fault insurance.  To determine this, you must first check your own automobile insurance policy to see if a rental car will be covered.  Many insurance companies in Michigan now have exclusions or exceptions that apply to rental vehicles, just as there can be exclusions or exceptions on coverage for vehicles driven for commercial purpose.   You must purchase the additional car rental insurance if you have entered into a long-term lease or rental agreement.  

A long-term lease of 30 days will make you an "owner" of the vehicle under Michigan law and your own Michigan no fault insurance policy will not apply to long-term car leases of 30 days or more.  If the lease is less than 30 days, you should still purchase the additional insurance coverage offered by rental car companies, even if the car rental may be covered by your own insurance and even if there are no exceptions or exclusions on coverage.  Rental car bodily injury coverage (the amount your insurance will pay to another if they are injured in a car accident) will likely be capped at the minimum required coverage of $20,000 under Michigan law.  This leaves you dangerously exposed to an excess judgment if the injuries you caused from a car accident are serious.  And, even when the rental car offers RBI coverage (residual bodily injury), it will likely fail to cover vehicle damage and collision repairs.  This expensive gap in coverage can result in you having to pay for all the car accident property damage from your own pocket.  For all of these reasons, the car accident lawyers at Michigan Auto Law always recommend you purchase the additional insurance coverage offered when you rent a car to drive in Michigan.

Out of State Car Rental:
What if I’m renting a car out of state – do I need the additional insurance coverage they offer, or will my Michigan no fault insurance be sufficient?

Yes, our auto accident attorneys always strongly recommend purchasing the additional rental car coverage because of important gaps in coverage.   

Most rental car companies offer customers the option to purchase additional coverage such as collision damage coverage, personal accident insurance and supplemental liability protection.  Most Michigan car accident lawyers will recommend that you check your policy or contact your insurance provider to determine if the coverage on your personal automobile extends to a rental car.  In many cases, renters are not appropriately covered and should purchase the additional insurance to minimize their risk should they be involved in an accident while driving a rental vehicle.   

For out of state rental use, the main risk of relying on your own Michigan No Fault insurance policy and not purchasing out-of-state rental coverage is that your own policy will not pay for car accident collision damage to the vehicle if you are involved in an accident when driving your rental car.  Furthermore, the RBI (residual bodily injury coverage that your policy would pay for another person injured in a car accident that you caused) may be reduced down to the minimum bodily injury requirements of $20,000.  Also, very important coverages that our lawyers strongly recommend everyone carry, such as uninsured and underinsured motorist coverage, may not transfer over to the rental car you are driving if you become seriously injured in a car accident. 

As a final note, these rental car policies are not clear, even to Michigan lawyers who read insurance contracts and policies everyday.  There are a number of confusing and ambiguous coverages, exceptions and exclusions that have been the subject of seminars and classes to lawyers and adjusters on what is and what is not covered.   Also, these contracts can be changed often, and there are now sweeping federal laws and, in many states such as Michigan, state laws that have reduced rental car liability after aggressive lobbying by the car rental industry in Congress. 

result is that you should assume that your own Michigan No Fault policy will likely be deficient and will not protect you fully if you are involved in a car accident. For this reason, our lawyers who specialize in helping people who have suffered personal injury in car accidents will almost always advise people to purchase the additional rental car insurance coverage when renting an out of state rental vehicle.