Do clients driving rental cars know what’s covered?

An increase in secondary auto accident claims for drivers using rental cars while awaiting repairs on their main rides is highlighting the need for an important post-accident conversation with clients.

Drivers involved in at-fault collisions while using rental cars often express surprise when the insurer covering their rental tells them they have to pay a deductible, says Jesica Ryzynski, a claims specialist with Mitch Insurance.

Those insureds are accustomed to having direct compensation-property damage (DCPD) coverage available in the event of accidents and often don’t understand the coverage for their rental car is not the same as what’s provided by their primary insurer.

And, in many cases, the coverage isn’t as robust as what they’re used to.

“They’ve just had an accident that they were not at fault for [and were] not told they have to pay a deductible because of the type of loss. They didn’t carry any coverage under section 7 – loss or damage coverage. Nor did they have the OPCF 20 transportation replacement or the OPCF 27 liability for damage to non-owned vehicles endorsement. They are in the rental vehicle because it was covered as part of their DCPD coverage,” Ryzynski tells CU.

“When they then have a collision loss with their rental, they don’t understand the coverage for their rental car is different than what they purchased from their primary insurer. They are then really confused when they have an at-fault accident and are being told, ‘This is a collision. You have to pay a deductible.’”

On the bright side, their primary auto coverage will allow the client to get a second rental car, provided they haven’t reached the limit on their rental coverage.

 

The fine print

Much of the confusion stems from a lack of understanding that the insurance being provided by the rental company can be profoundly different from what’s in a client’s primary auto policy contract.

“The [client’s primary] insurance company pays for the cost, but the actual contractual conditions are agreed upon between the rental company and the person renting the vehicle,” she explains.

“I’m also seeing a lot of people that have very obviously not read the contract. I understand; they’re in a stressful situation, they want to just get their [rental] vehicle and get out of there.”

But that’s not what should happen and it’s a lesson for adjusters and brokers that they need to stress the importance of reading the insurance contract for the rental — and to explain that rental coverage can be very different from their regular insurance.

It can be tricky for clients to grasp the nuance because they’re dealing with adjusters at their primary broker when managing the claim. In that context, they’re likely expecting things like deductibles and coverages to be the same ones they set when the bought their primary policies.

But, in fact, the rental policy is with a different company and has its own set of terms.

“Those deductibles could be anything. Those conditions could be anything,” Ryzynski says. This can be especially true if clients opt to use car rental companies that aren’t their insurer’s preferred vendor.

“When you use ‘Uncle Bob’s rental agency,’ I’ve seen people come back to me where they’ve had an at fault loss on that rental and they have a $5,000 collision deductible. They didn’t read the contract,” she says. “And that never happens at the preferred vendors, I can tell you that much for sure.”

 

 

 

 

Feature image courtesy of iStock.com/Khaosai Wongnatthakan