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Do I need to purchase insurance coverage on a rental car, even if I have a Michigan No-Fault policy?

April 5, 2011 by Steven M. Gursten

Michigan No-Fault attorney stresses that you should purchase the additional “optional” insurance coverage offered by out-of-state rental car agencies

It’s that time of the year again, when parents start fretting and high school and college students are wired for spring break trips. Our No-Fault insurance attorneys want to help keep students and travelers safe this season by reviewing some important auto insurance issues.

First and most important, there are more than a hundred auto insurance companies writing Michigan No-Fault policies, and my advice can’t possibly apply to all of them, so it’s best to call your auto insurance agent before a trip, to see how your No-Fault coverage applies in case of an auto accident out of state.

That aside, most drivers have no idea if they should purchase the additional insurance offered by rental car companies. When it comes to renting a car – especially when we’re talking about out-of-state rental cars – No-Fault insurance attorneys will almost always recommend purchasing rental car coverage.

Why purchase rental car insurance coverage if I have No-Fault insurance in Michigan?

The big reason is car damage. With most No-Fault policies today, there is an open question on whether the car damage to a rental car will be covered by your own auto No-Fault policy, even if you have purchased collision coverage for your vehicle. Ask your insurance agent about car damage and whether the coverage on your personal vehicle extends to a rental car. 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.

Most rental car companies offer customers the option to purchase additional coverage such as:
o Collision damage coverage,
o Personal accident insurance, and
o Supplemental liability protection.

The risk of relying on your Michigan No-Fault insurance policy when renting cars out of state

The good news is if you have No-Fault in Michigan and you are injured in a car accident in another state, you will still be able to collect No-Fault benefits – currently the nation’s best – for medical bills, wage loss, replacement services, mileage, and attendant care. But for out-of-state rental use, the main risks of only relying on your own Michigan No-Fault insurance policy and not purchasing the additional rental coverage include uninsured and underinsured coverage, the possibility of a reduced bodily injury coverage that can leave you personally exposed, and as said above, car accident collision damage to the vehicle.

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 down to the minimum bodily injury requirements of $20,000. Check your policy language or call your agent.

Also, very important insurance 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. Again, check and find out before you leave with your agent.

As a final note, check your credit card. Some credit card companies will pay for vehicle damage if the rental car is purchased on their card. Not bad.

In general, as with most insurance contracts, rental car insurance policies are deliberately written to be confusing. They also include a lot of exceptions and exclusions that, combined with the exceptions and exclusions of your own auto No-Fault policy, have been the subject of many seminars for lawyers and insurance adjusters on what is and isn’t covered.

Insurance policies and contracts for rental cars change often. If you are 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.

Our attorneys wish everyone a safe and happy spring break. Call one of our No-Fault attorneys at (800) 777-0028 if you’ve been injured in an out-of-state accident, and are concerned about your Michigan insurance rights.

Steve Gursten is one of the nation’s top No-Fault insurance attorneys. He frequently blogs about safe driving and the auto law in Michigan.

Related information:

Renting cars in Michigan and out of state

Recent car accident FAQs

Car accident lawyer lists top five hazardous actions by teen drivers

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights to better serve you. Call (800) 777-0028 for a free consultation with one of our insurance attorneys.

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