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What kind of coverage should I buy for rental cars?

February 13, 2013 by Steven M. Gursten

The consequences of not buying the optional collision coverage at the rental car counter

No one understands the many different add-on insurance coverages they try to sell to you at the rental counter when you are renting a car on vacation. And don’t feel bad – this includes many insurance lawyers who do this for a living.

The biggest confusion is over whether you need to spend the money or whether your own auto insurance or credit card company already covers these same coverages.

The good news is that many auto insurance policies will cover you in the event you rent a car on vacation or otherwise. This coverage is usually referred to as coverage for a “temporary replacement vehicle.”

But you must review your auto insurance policy to make sure you have this coverage. And you must make sure you have it before you decide to decline the car rental company’s optional insurance coverage(s).

Some auto insurance policies do not cover rental vehicles, and state so explicitly in their policies or have rental cars and rental car vehicle damage listed under policy exclusions.

If you only have PLPD on your own car and you rent a car on vacation, your coverage for the rental car will be the same as your regular car, PLPD. Therefore, if you are involved in a car accident, your insurance will not pay for any collision damage.

And depending on the laws of the state your are in at the time of the accident, you may be responsible for paying for the damages out of pocket.

In Michigan, where I practice law, you are responsible for the collision damage to your vehicle, other than the mini-tort (first $1000 of damage if you are not at fault). If you have PLPD on your own car, you should definitely purchase the collision coverage offered by the car rental company.

As an insurance attorney, I always say that it’s better to be safe than sorry. Buy the additional rental car insurance when you can. But better yet, make sure to call your own agent and review your own policy with them before you step up to the rental desk at Hertz.

Related information:

3 tips to protect yourself when renting a car

Who pays Michigan NF benefits after an out of state crash in a rental car?

Insurance coverage issues for Michigan residents renting out of state

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