Insurable Interest

by: Aaron Whitaker

I get asked fairly often if auto coverage extends out to vehicles being rented. Everyone wants to know if they should buy the car rental company’s insurance or not. I always recommend they do, and if they chose not to, I recommend at least read the rental contract in its entirety.

Renting Vehicles-

Most people have or will rent a car at some point. In the process of renting the vehicle, you will be presented with the option to purchase their insurance for the rental vehicle. It’s always a good idea to give your insurance agent a call to confirm what, if any, coverage you have extending from your auto policy to the rental vehicle. Make sure you understand what the coverage for your policy is, and what it isn’t.

Although on most Michigan auto policies there would be coverage extended to the rental vehicle, I certainly can’t speak for all Michigan auto insurers. If there is coverage extended, it is often the broadest coverage found on the auto policy that is extended to the rental vehicle.

What in the world does that mean? I’ll make it easy. You have 2 vehicles on your Michigan auto policy. Vehicle 1 only has PLPD coverage, while vehicle 2 has liability, comprehensive, and collision. If you rented a vehicle, it would have the same coverage as vehicle 2 extended to it, as vehicle 2 has broader coverage than vehicle 1 on your auto policy.

Auto Insurance, Rental Car, Portage Auto Insurance

The Risk-

Let me tell you a story. You land at the airport and you make your way over to the car rental shop. You get your rental, say no to the rental company’s insurance when it is offered, and off you go. Then bam! somebody hits you. The damage isn’t too bad, definitely repairable. You get the police report, call your agent to report the accident, and report the accident to the rental company. You go about your business and return the vehicle. Then a few days later, you receive the repair bill for the entire cost of the vehicle!

The rental company declared the rental car as totaled, and they tell you that it was in the contract that you signed when renting the vehicle that they are able to total a vehicle at their discretion, even when the insurance adjuster wouldn’t consider the vehicle totaled. The adjuster from your insurance company inspects your rental vehicle, and they determine that the car is not totaled.

What happens now? The insurance company will pay up to the cost to repair the rental vehicle, if it is from a covered loss and coverage applies, then you get stuck with what’s left on the bill! You didn’t want to buy the rental car, that’s why you only rented it! If only you had signed the insurance contract the car rental company had offered you, it would have paid out for the difference between what your insurer is paying out and the cost of the totaled vehicle (minus any deductibles that apply).

Final Word-

Be careful to read any contract prior to signing it, especially in the case of renting a vehicle. I wouldn’t want to lean on the goodwill of a car rental company if an accident occurs. Sometimes biting the bullet and springing for a little extra insurance can pay off in the end, don’t get stuck in a bad spot trying to pinch pennies.

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 About the author:
Aaron WhitakerAaron Whitaker joined Whitaker-LaChance in 2014 as a Personal Insurance Customer Service Representative. He brought with him extensive customer service experience from working in a retail professional camera store and computer electronic store for three years in Chicago. Aaron manages all personal insurance placement, marketing, account service and claim management. His expertise is in working with our clients to make sure their insurance program takes care of them through all the changes in life. Aaron is a graduate of Kalamazoo Home School Association and attended Columbia College in Chicago, where he studied Graphic Art Design. He is an avid photographer and enjoys fishing.

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