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

We all know that anxious feeling when a rental car agent urges us to purchase extra insurance. No one wants to spend money unnecessarily, but what happens in a rental car accident? The counter, with a line behind you, is not the time to start researching. Learn the facts before you rent.

Here is a guide to help Michigan drivers make the right choice.

WHAT ARE THE DIFFERENT TYPES OF SUPPLEMENTAL RENTAL CAR INSURANCE?

Rental companies often offer several add-on products. Understanding each one helps you decide what you need beyond your own auto policy.

There are four basic types most rental companies offer:

Collision Damage Waiver (CDW)

Also called a Loss Damage Waiver (LDW), this product can protect you from paying if the rental is stolen or damaged during the rental term.

Michigan No-Fault does not pay to repair your own car unless you bought collision or comprehensive coverage. Not every personal policy extends collision coverage to rentals. Ask your agent whether yours does. If it does not, the waiver may be worth the daily charge compared with the cost of a wrecked or stolen rental.

Some rental companies also bill for “loss of use” while the car is repaired and for diminished value after a crash. A CDW/LDW may cover those charges. Read the contract.

Supplemental Liability Insurance

If you cause a crash in a rental, this insurance can cover damage to someone else’s car or property and liability for injuries, usually as excess coverage over your own auto liability.

Michigan law requires at least $50,000 per person and $100,000 per accident in residual liability coverage. Some rental companies sell extra liability with limits as high as $1 million.

If your own liability limits are at the minimum, extra coverage can help if you injure someone or damage another vehicle.

Personal Effects Coverage

Most homeowners or renters policies cover personal belongings, including off premises. If yours does, this add-on may be unnecessary.

Personal Accident Insurance

This product markets medical coverage for injured renters. If you have Michigan No-Fault, PIP medical benefits generally apply to accidents in the United States or Canada, including in a rental. If you chose a limited PIP medical option, you may still have bills above that cap.

DO I NEED ADDITIONAL RENTAL CAR INSURANCE IF I USE A CREDIT CARD?

Many major cards include some rental-car damage protection, but the terms vary. Some coverage is secondary to your auto policy (it may pay a deductible). Some is primary. Luxury cars, RVs, motorcycles, trucks and trailers are often excluded.

Card benefits often apply only if you decline the rental company’s CDW/LDW and pay for the rental with that card.

Call the card issuer before you travel and ask what is covered and what is not.

DOES MY MICHIGAN NO-FAULT INSURANCE COVER A RENTAL CAR ACCIDENT IN ANOTHER STATE?

In most cases, yes. If you are a named insured on a Michigan No-Fault policy, or covered as a spouse or resident relative, you are generally entitled to PIP benefits for an accident in the United States or Canada, including while occupying a rental.

The rental company’s insurance and your collision coverage (if it extends to rentals) are separate questions from PIP medical and wage-loss benefits.

WHO SHOULD PURCHASE SUPPLEMENTAL RENTAL CAR INSURANCE?

• Drivers whose collision or comprehensive insurance does not include rentals
• Drivers who do not have a credit card that provides rental damage coverage
• Drivers who are not covered by a Michigan No-Fault policy
• Drivers with minimum liability limits or limited PIP medical benefits
• Drivers whose belongings are not covered by renters or homeowners insurance
• Drivers on long-term rentals, which may be treated more like a lease; confirm coverage with the rental company and your insurer

Before you rent, ask your insurance agent exactly what your policy covers. If you plan to rely on a credit card, get the exclusions in writing or from the issuer.

PUT OUR EXPERIENCED CAR ACCIDENT LAWYERS TO WORK FOR YOU TODAY

Whether you are renting a car or driving your own, if you are injured in an accident, we can help. Our knowledgeable legal team knows what it takes to pursue your case, and we have the expertise and resources to seek the compensation you and your family deserve.

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