Getting into a rental car accident could be frustrating.
Usually you are in a city that you do not know, a state with laws that you are
not familiar with, and you are driving someone else’s car. This is a formula
that can give you a big headache. So here is an overview of how rental car
accident claims get handled and settled.
When you rent a vehicle, the rental company will ask you
for your proof of insurance. Many of them will ask for your
Declarations Page. They want to see what coverages you have. They will be
looking for liability, collision, and comprehensive, in your policy.
Liability is because it is required by law, but collision and comprehensive will
protect the car you will be driving. 99% of the companies out there will extent
coverage to the rental car and the rental company knows that.
Rental companies will want to know how much your
deductible is. Your deductible is the portion of the loss that you are “self
insuring”. For example, if the damage to the car is $5,000 and your deductible
is $500, then the insurance company will only pay $4,500 ($5000 – $500
deductible); you will have to pay the $500 out of pocket. Many rental companies
will require that your deductible be less than $500 or you will have to buy
extra insurance at the time of renting the vehicle.
When you rent the car, then rental agent will ask you if
you want extra insurance. Three things can happen: you decline all together, you
buy extra insurance, or you buy a collision damage waiver. Depending on which
option you select, the rental car accident will be handled differently by your
First, if you decline all together, then you better have
an active policy that will provide first party coverage for the rental car. Your
insurance company will be responsible for paying the rental company for the
rental car, but those payments will be subject to all the terms of your policy.
What this means is that your deductible will apply and you will have to pay that
to the rental company up front. It does not matter that you were not at fault
for the accident; the rental car company is entitled to get the car fixed as
soon as possible. Your insurance company will be responsible for going after the
The restrictions of your policy can cause several
problems. Mainly it will be on the loss of use,
If you donot carry rental coverage on your policy, you will owe the rental expenses to
the rental company as if they had to rent a car. If the vehicle will take five
days to repair, then you will owe the five days rental. Also, if you do carry
loss of use coverage (rental car coverage) in your policy, but the limit is
below what the rental car would rent for, then you would owe the difference. For
example, your rental coverage is $40 per day, but the rental car cost is $50 per
day, you will owe the $10 difference between the two.
Second, you buy “extra” insurance. This is where things
can get a little complicated. The insurance adjuster must look at actual policy
that you bought (not given to you when you sign). The terms of that policy will
determine how the accident will be handled. Some rental insurance coverages
provide complete coverage any rental car accident as long as you pay the
premium. They would cover the car that you hit (if you are at fault), and the
rental car damage. You could still have a deductible. Your insurance company
usually will step in as a secondary form of coverage in case the rental car
insurance policy limits are low. However, you need to read both insurance
polices together to see which one would pay first and which one would pay as the
Last, you buy collision damage waiver. Many people will
tell you that this is coverage for your deductible. This is not true. When you
rent a car, you agree that you will return the vehicle as it was given to you.
You also agree that in case of a rental car accident, you will pay for the car.
A collision damage waiver will waive that provision of your
contract. This means that you are no longer responsible for the rental car.
However, you still need to file a claim for your medical bills (in case of
injury) and to defend you or pay for the car you hit (if you are at fault)