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Rental car insurance advice from an independent insurance agent

July 12, 2016 by Steven M. Gursten

MIPIA President and agent with Insurance Center of Monroe, Scott Shappee, offers practical advice on rental car insurance to save people money


You wait in line at an airport at the car rental counter. You finally get to the counter, and among the many forms they ask you to sign off on or initial is one for additional insurance for your rental car. You, like most people, suspect this is a big additional profit generator for the car rental companies, but you also have no idea if your own auto insurance policy will be adequate to protect you if you are involved in a car accident.  It’s a confusing topic and I’ve included at the bottom of this blog post 4 additional blogs I’ve written on rental car insurance.

But today, I want to share an insider’s guide to the questions:

  • Do you need to purchase rental car insurance from a rental car company?
  • Will you be paying for coverage you may already have through your personal auto insurance policy?

Other questions inevitably center around the meaning of the following, confounding terms that appear in most rental car company insurance contracts:

  • Loss/collision damage waiver.
  • Supplemental liability protection.
  • Personal effects coverage.
  • Personal accident insurance.

To gain an insider’s perspective on these issues, our own auto accident attorneys reached out to Michigan auto insurance expert, Scott Shappee, an independent insurance agent with the Insurance Center of Monroe. Scott is in a unique position to help us answer these questions. He is the President of the Michigan Association of Professional Insurance Agents.

Does Michigan’s auto No Fault insurance cover me if I’m renting a car?

We started off our discussion (via e-mail) by asking Scott about the advice he gives his clients about the extent to which their personal, Michigan No Fault auto insurance policies will cover and protect them and their use of a rental car?

Here’s Scott’s answer:

“Generally in Michigan your current personal auto policy coverages will extend to the car you are renting, including the limits for liability and deductibles for comprehensive and collision. The problem is that there can be some gaps in coverage if you were to have an accident. One of the biggest gaps I see is the rental car ‘loss of use’ charge or the ‘diminished value’ charge back to the renter. If the rental vehicle is in an accident and spends 15 days in the shop, then many times the renter is responsible for the loss of use of the rental car to the rental car company. Those charges can add up quickly. Couple that with paying for the diminished valued of the damaged rental car and you can easily end up with a large bill even though you thought you were ‘covered.’ There can also be reasons to deny the claim such as if the rental car was being used on a business trip. For these reasons, we always recommend customers to purchase any extra insurance coverage the rental car company offers or very closely read the rental agreement to see what you could be responsible in the event of an accident.”

Which rental car insurance coverages should I purchase?

Next, our attorneys asked Scott for his advice about what people should consider when deciding whether to purchase any or all of the following insurance coverages offered by the rental car companies (which we mentioned above): Loss/collision damage waiver, supplemental liability protection, personal effects coverage, personal accident insurance.

Below are Scott’s comments about each of the above rental car insurance “coverages”:

  • Loss/collision damage waiver: “This eliminates one of the potential gaps in coverage you have and I would highly recommend purchasing this to supplement your personal auto policy coverages.”
  • Supplemental liability protection: “This is a nice option as it usually pays first dollar in the event of a claim. In Michigan, it can sometimes pay the state minimum liability limits of $20,000/$40,000 plus the additional coverage amount – usually $1,000,000 – before you ever have to file a claim with your personal auto policy. Keep in mind, this coverage usually doesn’t include uninsured and underinsured motorist coverage.”
  • Personal effects coverage: “If you have a renters insurance policy or a homeowners insurance policy, you could be doubling down on coverage here. But if you were to file a claim here you could eliminate the need to file a claim to your homeowners policy and keep your ‘claim free’ discount in check! Plus, your personal policies might carry a $1,000 deductible, so reading this coverage option carefully could save you in the long run. Remember to read the coverage specific limits, exclusions, and what deductible you may be responsible for.”
  • Personal accident insurance: “This is an interesting coverage designed to provide accidental death coverage, medical expense coverage, and or ambulance expense coverage. In some cases, this coverage will protect the driver even when he or she is not driving the rental vehicle. The fine print here is very important because in Michigan your personal injury medical benefits are covered with no limit and the rental car coverage may have a limit as low as $2,500. Although the accidental death benefit can be as high as $175,000 for the driver. Weighing the cost of this coverage versus coverage you may already be paying for is most important here.”

More advice for Michigan drivers renting cars

Finally, we asked Scott if he had any additional advice or suggestions for Michigan drivers who may be renting a car. Scott told us:

“My biggest concern as a consumer when renting a car would be the ‘loss of use’ charge and the ‘diminished value’ charge that can come back and bite you. I would be very upset if my agent told me that my personal auto insurance coverage carries over to the rental car and I didn’t need to purchase the extra coverage being offered by the rental car company only to find out about these charges later. That is what I try to educate my customers on.”

To learn more about the legal and No Fault insurance implications of renting a car, please check out the following Michigan Auto Law blog posts:


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