Does My No-Fault Insurance Cover a Rental Car Accident?

What Are the Different Types of Supplemental Rental Car Insurance?

There are four basic types of insurance that most rental car companies offer:

Collision Damage Waiver 

Also called a loss and damage waiver, this coverage protects you from financial responsibility if the vehicle is stolen or damaged during the course of your rental term.  

Michigan No-Fault insurance does not cover theft or damage resulting from an accident or vandalism, which is why many car owners choose to add various levels of collision coverage to their auto insurance policies. However, not all policies extend collision coverage to rental cars. Therefore, it is important to check with your insurance agent to see if your collision coverage applies to rental cars. If not, it is a good idea to purchase the waiver. The cost is minimal compared to the amount you would have to pay if the rental car is damaged or stolen.

Furthermore, some rental car companies will assess additional charges for the “loss of use” of a vehicle while it is being repaired as well as for the “diminished value” of a car after it has been damaged in an accident. A collision damage waiver will protect the renter from having to pay these costs.

 Supplemental Liability Insurance

If you cause an accident while driving a rental car, this insurance covers damages to someone else’s car or property as well as certain medical expenses for those who are injured in the crash.

Michigan No-Fault law requires drivers to have liability coverage of at least $50,000 per person and $100,000 per accident. However, some rental car companies offer supplemental liability insurance with limits as high as $1 million.

If your own liability coverage is at the low end of the scale, you may want to consider purchasing this additional insurance to protect you in case you are responsible for an accident where another vehicle is damaged and/or other people are hurt.  

 Recommended reading: What Every Michigan Driver Should Know about the New No-Fault Insurance Law

Personal Effects Coverage 

Most homeowners or renters insurance policies cover personal belongings that are stolen or damaged. If your policy includes off-premises coverage, this additional insurance is probably unnecessary.

Personal Accident Insurance 

This insurance covers medical bills for rental car drivers who are injured in an accident. However, if you are covered under a Michigan No-Fault policy, your Personal Injury Protection (PIP) medical benefits apply to any accident within the U.S. or Canada, including rental car accidents.

However, if you have chosen a No-Fault policy with limited PIP medical benefits, you may want to consider this additional coverage.

 Recommended reading: What Are the Six New Personal Injury Protection (Pip) Options and Which One Should I Choose?

Do I Need Additional Rental Car Insurance if I Use a Credit Card?

Many major credit cards include protection for rental car accidents, but the coverage varies depending on which card you use. Some cards provide coverage that is secondary to your primary insurance policy, which may include paying your deductible. Others cover damages before your insurance company gets involved.

In addition, several credit card companies exclude rental coverage for certain luxury cars, RVs, motorcycles, trucks and trailers.

Furthermore, the coverage offered by many credit card companies only takes effect if the driver declines the collision damage waiver offered by the rental car company. And, while this may seem obvious, the credit card that provides the coverage must be used to pay for the rental vehicle.

To be safe, check with your credit card company ahead of time to find out exactly what is covered in the event of a rental car accident.

Recommended reading: Choosing a Michigan Car Accident Lawyer

Does My Michigan No-Fault Insurance Cover a Rental Car Accident in Another State?

In most cases, yes. If you are the owner of a Michigan No-Fault policy or are covered under the policy of a spouse or other relative in the same household, you are entitled to Personal Injury Protection (PIP) benefits as long as the accident occurs in the United States or Canada.

Who Should Purchase Supplemental Rental Car Insurance?

• Drivers whose collision or comprehensive insurance does not include rental vehicles
• Drivers who do not have a credit card that provides collision coverage
• Drivers who are not covered by a Michigan No-Fault policy
• Drivers with limited liability insurance or Personal Injury Protection medical benefits
• Drivers whose personal belongings are not protected by renters or homeowners insurance
• Drivers with rental agreements of 30 days or more (these are considered long-term leases and therefore not covered by Michigan No-Fault policies)  

Before renting any vehicle, check with your insurance agent to find out exactly what coverage your policy provides for rental car accidents. And, if you plan to use a credit card that offers rental car accident protection, contact the company for details about coverage and exclusions.  

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