Rental Car Accidents Spike Over the Holidays. Who Pays if It Happens to You?

With the holidays upon us, many Michiganders will be doing some traveling to visit relatives in far-away places… or perhaps taking a weekend getaway up North to hit the ski slopes… or maybe hopping on a plane to go somewhere warm and just a bit less slippery. 

In many of these happy circumstances, you’ll likely end up renting a car or maybe an SUV to take you from the airport to wherever it is you’ll be staying. And that raises the perpetual perplexing rental-car counter question: “Should I buy all those extra insurance policies being offered by the car rental company?”

Let’s take a few minutes to discuss the pros and cons of accepting that additional insurance coverage when renting a vehicle, and also to clarify what happens with your regular Michigan no-fault insurance if you do happen to get into an accident involving a rental car – either close to home or in some distant holiday vacation getaway.

Those Rental Counter Add-Ons Add Up. Are They Actually Necessary?

For the purposes of this article, we’ll assume that you already have your own no-fault car insurance policy covering the vehicles in your household. Most of the time, but not always, these personal auto policies offer extended coverage to protect you when renting a vehicle while you’re traveling. However, as we explained in a previous article, you’d be wise to check with your insurance agent to verify your policy’s deductibles, limitations and exclusions, and to be 100 percent sure you’re covered when driving a rental car. But most likely your Michigan no-fault insurance does offer basic coverage when you’re traveling away from home.

However, car rental companies also want to be sure they aren’t taking excessive risks when they hand over the keys to their vehicles, so they often strongly recommend purchasing a variety of add-on insurance coverages including Loss Damage Waivers and/or Collision Damage Waivers (LDWs and CDWs), along with Supplemental Liability Insurance (SLI) policies, among other options. Each of these optional insurance plans can add significantly to the cost of your rental car, so be sure you carefully review the choices being offered and double check pricing when you’re at the car rental counter so you can make an informed decision about which coverage to buy (or which to decline).

The most common of these plans – LDWs and CDWs – are insurance products that provide you with added financial protection if your rental car is damaged in a crash, becomes vandalized, has a flat tire, or gets stolen during the rental period. For example, car rental company Avis states on their website that they already insure their vehicles, so you aren’t required to have any other insurance coverage if you wish to rent a car from them. But Avis offers optional Loss and Collision Damage waivers to reduce your financial risk from the common hazards we’ve listed above (among others). For instance, Avis promises that their “loss damage waiver reduces the amount you pay for any damages to the car.” The company goes on to note that “your personal insurance may charge you a deductible if your rental car gets damaged, but with an LDW, you have no extra expenses.” Costs for this coverage vary based upon a variety of factors, so carefully weigh both the charges and the benefits when you’re offered this type of plan. 

Another common car rental insurance option is Supplemental Liability Insurance (SLI), offering coverage that exceeds the minimal amounts which might be included in a basic car rental agreement or provided by your own car insurance policy. As WalletHub explains, you may wish to buy an SLI policy when renting a vehicle if your personal car insurance doesn’t provide adequate protection to safeguard your family’s net worth should you be faced with a lawsuit. In other words, if you’re found to be responsible for an accident when driving a rental vehicle, and are subsequently sued for damages, you might be liable for significant out-of-pocket costs if you don’t have sufficient insurance coverage to cover the losses experienced by people harmed through your actions.

An SLI policy can help minimize your financial risk in this specific situation, but you should also check with your insurance agent to be certain you’re properly covered at all times – not merely when you happen to be renting a car. One way to protect yourself in a variety of circumstances is to purchase an “umbrella” insurance plan – a policy that offers additional coverage beyond the limitations of your regular car and home insurance policies. Check with your agent to learn more about this form of insurance, which is typically very affordable.

Another place to check is with your credit card provider. Many cards, even some with no annual fee such as the American Express Blue Cash Everyday account, offer built-in insurance protection when you use them to rent vehicles. So be sure that you aren’t paying for rental car coverage you don’t need by first verifying any benefits your credit card might already be providing beforehand!

One final thing to remember is that many accidents involve more than two vehicles. In such cases, determining liability can be a complex process, and often multiple drivers are found to have varying levels of blame. For this reason, among others, it’s always wise to have adequate liability insurance in place. And, as you know, Michigan requires all drivers to carry no-fault coverage adhering to minimum state standards.

A Few Dollars Saved Now Could Cost Thousands Later.

At this point, if you’re a responsible Michigan driver, you might be saying to yourself, “My no-fault car insurance policy is all the protection I need while I’m traveling.” And that can certainly be true, as long as you’ve chosen the right level of coverage based upon your family’s net worth and risk profile. But remember that Michigan effectively allowed policyholders to “water down” their Personal Injury Protection (PIP) benefits a few years back by letting insurance companies offer less than unlimited PIP coverage. It might be tempting to save on your car insurance premiums by choosing a bare-bones policy, but as we’ve noted in previous articles, we strongly recommend buying a policy with unlimited PIP benefits because anything less leaves you vulnerable to enormous financial risks if you get into a crash involving serious injuries. Saving a few dollars by choosing anything other than unlimited PIP benefits is taking unnecessary chances with your family’s future.

To sum up, it’s certainly true that most of us won’t get into accidents while driving rented vehicles on vacation this holiday season… or really any time of year. So, it’s unlikely you’ll need to purchase additional car rental insurance beyond your regular no-fault policy. However, spending a few dollars more for added peace of mind when you’re driving an unfamiliar vehicle on unfamiliar roads isn’t the worst decision you could make. If you do happen to get hurt through no fault of your own in a crash anywhere in Michigan – whether you’re in your own car or in a rental vehicle – know that we’ve got your back. And if something unexpected takes place while you’re traveling out of state, we might even be able to recommend a dependable personal injury law firm nearby. So, when the worst happens – regardless of your location – call 855-MIKE-WINS (855-645-3946) and we’ll do our best to help you … wherever you happen to be!