Know the Law – Rental Car Insurance

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The busy holiday travel season is approaching, which means many of you will be renting a car as part of your travels. When renting a vehicle, you’ll be asked whether you want to buy rental-car insurance. But do you really need to spend money on this extra insurance coverage?

Michigan drivers should remember that, if they already have an auto insurance policy, then they have no-fault insurance coverage. Michigan auto no-fault insurance coverage:

  • pays for an injured person’s reasonable medical expenses, for life.
  • applies to the policyholder, the policyholder’s spouse and any resident relatives.
  • applies even if you’re not driving your own vehicle — in other words, if you’re driving a rental car.
  • applies when you’re injured out-of-state.

Therefore, if you have a Michigan auto no-fault policy, then your medical expenses will be covered if you’re injured in an accident, including in a rental car. This means the extra rental-car insurance really isn’t needed for any medical costs.

However, Michigan no-fault insurance does not cover property damage or theft. In light of this, it’s a good idea to check with your auto insurance carrier to see if your existing policy includes any theft and property damage. If it doesn’t, then you may want to purchase the extra coverage.

In addition, some credit card companies offer coverage for damage and theft when the card is used to pay for the rental car. However, the coverage might exclude certain types of rental vehicles. And to be eligible, you’ll probably have to turn down the over-the-counter rental-car insurance. Be sure to check with your credit card company about what it offers.

If you do consider purchasing supplemental insurance through the rental-car company, then it’s important to find out how many drivers are covered, who is covered and exactly what is covered. In other words, ask a lot of questions at the rental-car counter.

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