We all know that anxious feeling when a rental car agent urges us to purchase additional insurance. No one wants to spend money unnecessarily, but what happens in the event of a rental car accident? Standing at the counter with a long line of customers is not the time to start conducting research. Before that moment of decision arrives, it pays to learn the facts about rental car insurance. Here is a guide to help Michigan drivers make the right choice.
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.
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
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.
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.
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 win your case, and we have the expertise and resources to make sure you receive the compensation you and your family deserve.
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