By Rick Tresher
Some of you will have the good fortune to take a trip this summer.
If you will be renting a car, though, make sure you have adequate insurance coverage. A rental car agent usually asks you whether you have insurance or if you want to buy coverage from them. Rarely do they explain how your insurance or their insurance covers you.
Here are several important considerations.
In Florida, we are required by law to have insurance on our vehicles. Many times, folks have told us they have “full coverage” on their vehicle. But what is that?
In Florida, we MUST have No-Fault Insurance, which pays for our own medical bills and lost wages if we are injured in an accident, and Property Damage Liability coverage, which pays for damage to the other vehicle if we cause an accident. Surprisingly, we are not required to have bodily injury liability coverage, to compensate another for injuries we cause. We are not required to have collision or comprehensive coverage to pay for repairs to our vehicle.
For a rental car, your personal auto policy normally provides the same coverage you have on your own vehicle. If you are comfortable with the amount of coverage you have, then you probably will be comfortable with it for the rental car. If not, you may want to buy the insurance offered by the rental company.
At least one gap exists in the coverage we have on our policies that can lead to an unpleasant result if your rental car is damaged. When you rent a car, the agent will ask if you want to buy “loss damage waiver” coverage. If not, the agent will ask you to initial a place on the rental agreement where you rejected it. What the heck is Loss Damage Waiver?
Your private policy may have collision and comprehensive coverage, subject to a $100 deductible, but it won’t cover everything. While on vacation, you drove down a road that was a little too rough for the vehicle you rented and you ran into a hole, damaging the frame. When you returned the vehicle, the rental agent told you that the car would have to be repaired and that you would be contacted later. Not to worry, your coverage will pay for the repairs, less $100. Here is the sticker! The car will be out of service for two weeks while it is being repaired. Hertz claims it could have earned $1,000 during that two week period. You are responsible for that loss of use and your policy is probably not going to cover it. Had you purchased the Loss Damage Waiver coverage, it would have paid for the damages caused by the loss of use of the rental car.
As with most insurance, Loss Damage Waiver coverage is extremely expensive. Whether or not you buy the coverage is a private decision. But if you rent a car while traveling this summer, it would be wise to check with your insurance agent about what your policy covers for a rental car.
Another potential pitfall concerns No-Fault insurance, which will cover you even if you drive to another state. But No-Fault may not cover you if you travel out of state and are injured while riding in another person’s vehicle or a car you did not rent.
The terms of your auto policy, and Florida law, dictates the coverage you are owed. Not all insurance policies are alike. If you plan to travel this summer, it would be wise to contact your insurance agent about whether your policy provides the coverage you need.