Thursday, September 16, 2010

How It Works: Rental Car Coverage, Part 2

In Part 1, we discussed one of the restrictions placed on rental car insurance. This installment covers a few more:

Second, a rental used by a driver “under the influence of intoxicants, drugs, or any other substance know to impair driving ability” will void the coverage. It may not say “legally intoxicated”. “Under the influence” means one beer or one glass of wine. This is standard language with the Big 3 (Hertz, National and Avis) and will be found with other rental car companies. This includes taking of medicine like for a cold or the flu. This is the single most problematic exclusion in a car rental contract because you’re going on vacation to have fun, right? Even if it is a business trip you not doing it to not enjoy yourself. Be extremely careful here and take great care to keep from cancelling this coverage due to this Prohibition.

Third is using the vehicle in an “abusive or reckless manner, or if convicted of careless driving”. Some rental companies can and will exclude “violation of anytraffic law. See if your contract has this before you sign it. See if it can be removed. If it is in it and if the rental company won’t remove this then you may want to use another rental company that does not have this prohibition as a part of their agreement.

To be continued...

--Steve Whitten

Thursday, August 19, 2010

How It Works: Rental Car Coverage, Part 1

In my last blog installment, I mentioned that there are basically six options one would have at the Hertz counter at some airport after flying in. None of these are an easy choice. The first option (refer to the first blog) is to buy the Rental Car Coverage offered to you. Let’s explore this option which is usually the best option as well as the most expensive. It is another travel charge beyond just renting the car that may come in at anywhere from $15 to $40 more per day. The cost varies greatly from city to city or country to country and among the different car rental agencies as well as the type of car you’re wanting to rent. Another factor is the deductible you choose.

So, first you will want to enjoy reading their contract. Yes, the rental agreement is a contract. Each rental car company has their own contract which will differ. There is no uniformity even with the “Big 3” which are Hertz, Avis and National. As with all contracts one could be at a serious disadvantage if you fail to read it. Take a few moments and read it carefully. Find out what you’re about to be obligated to.

Still there are some similarities when it comes to the liability and the physical damage to the car itself. For liability none of the car companies will provide any more liability than they have to. In other words they will meet each different State’s minimum requirements for bodily injury and property damage which in most states is 25/50/25. For now that is what it is in Oklahoma. But if you’re traveling you are most likely out of State. So, ask about this. Yet, in most instances the rental companies have made their liability insurance excess coverage. Doing this makes your insurance primary coverage or the insurance that will respond and pay first. Ask the rental company if they will increase these limits for an additional charge. The Big 3 will usually go up to a $1,000,000 combined single limit of liability for bodily injury and/or property damage. Then ask them if you buy the higher limits will they make their insurance primary? You can expect to pay another additional cost to do this.

What most folks think of when they ask about the rental insurance is damage to car itself. We call this physical damage but it includes more than things like fire or theft or a wreck. You’ll get “full dollar protection” for the rental including the loss of use, claim expenses, attorney fees, “administrative expenses”, towing and labor, diminution of value (a new one costs more than an old one), etc. This is “Collision Damage Waiver”. This is what they want to sell you. This is what most people buy. You buy it and you have “peace of mind” and for $40 to $50 per day or $280 to $350 per week you have no need to worry, right?

Not so fast, nomad. You did read the contract didn’t you? Did you read the part about “Prohibited Uses of the Vehicle”? The Big 3 usually have some variation of the following six “Conditions” or “Prohibitions” that will nullify their coverage. If you violate any one of these Conditions the rental agreement coverage will not pay. Even though sometimes there are more than these six (please read your contract carefully looking for these) we will deal with only the following six:

First, the vehicle will be used only by authorized drivers. If you’ve signed the rental agreement then you are an authorized driver. Anyone else must be listed. It may cost $6-8 per person per day. So, only one other driver at $8 per day for 5 days is $40. You can play this out with more drivers if you wish, but keep in mind that if this person is not listed then they cannot drive.

To be continued...

--Steve Whitten

Wednesday, July 14, 2010

How It Works, Introduction

Over the last thirty plus years as an insurance agent/broker in Oklahoma, far and away the single most often asked question is “what should I do when I rent a car?” The question might also be “should I purchase the coverage that Hertz (or National or Avis) will offers and wants me to buy?” Most often that question is followed by “will my insurance policy cover it (the rental unit)?”

What options does one have when she or he walks up to the rental counter after a long flight? “What should I do?”

Have you ever been in that situation and you wished you had done some planning or at least asked your agent ahead of time?

If you read this, in and all of the subsequent installments, hopefully you’ll have a better and well-informed idea of what to expect.

The way it works appears to be a choice of one or more of six options, which are:
  • purchase the rental car coverage offered to you
  • use your Personal Auto Policy (PAP) if your trip is for pleasure
  • use your Business Auto Policy if your trip is in some way tied to your job work-related
  • use with your Personal or Commercial Umbrella Liability policy
  • pay with a credit card
  • pay with cash…YOUR cash.
In future posts, we’ll each of these in much more detail as it relates to liability: you hurt someone or damage their property and you are at fault or you are contractually responsible for damage to the rental car. However, for now, this is…

How It Works.

--Steve Whitten