Most states have a financial responsibility law that requires registered vehicles to have a minimum amount of liability insurance. Depending on the law in the state the car is rented and the wording of the renter’s personal auto policy, the minimum coverage is likely to be provided by the rental car company. Renters are given the option to purchase additional limits from the rental car company or use the automatic excess personal auto limits available on their own policy.
Personal injury protection—medical and disability benefits coverage for injuries sustained in auto accidents— is one of the state’s more unique auto insurance provisions. Remember that PIP coverage follows the driver. A New Jersey operator of an out-of-state rental car still will have these benefits when operating a rental car, regardless of where they drive it.
Unfortunately, the discussion gets more complicated when we consider damage to the rental car. While the renter’s personal auto policy may cover damage to the rental car, its coverage has limitations. Personal auto coverage for a rental car is conditioned on the renter having at least one owned vehicle insured for its damage on the policy. Moreover, typically the rental vehicle must be a replacement vehicle for one of your cars that is in for repairs. If covered, there will be a deductible and payment will not exceed the repair or actual cash value of the rental car, along with a small amount for the rental car company’s loss of use. Rental car contracts can hold the renter responsible for expenses that go beyond the coverage in a personal auto policy, which may include administrative fees, additional loss of use expense or diminution of value. Rental drivers who want to avoid risk will be inclined to buy the “collision damage waiver” offered by the rental car company.
It’s a lot to think about as you embark on a trip. Give E & K a call before you leave, so the decision will be easy at the rental counter.