Accident in a Rental Vehicle. Who’s Liable?

rental car companiesWhen asked if they would like to purchase insurance for their rental vehicle, many drivers simply decline. No one really expects to be involved in a collision for the short time they are renting a vehicle, so they hope for the best and walk away with the relief of dodging extra expenses.

But, what happens if you get in a car accident while driving a rental? Or even worse, what happens if the driver of a rental vehicle was uninsured? Many people believe that just because the rental company owns the vehicle, that company will be liable for any damage, but this is not the case. You are not off the hook just because you do not own the vehicle or do not have coverage.

First off, many rental car companies do not require proof of insurance to obtain a rental vehicle. However, it is strongly encouraged to have some type of coverage in the event of an accident or else you may be responsible for any damage caused to the rental car as well as any other car damaged or person injured.

At the rental counter, you will be asked whether you would like to purchase certain types of insurance, whether that coverage is for you, your belongings, or the vehicle itself. Here are a few ways in which you may be covered:

Insurance through the rental company. Each rental company will offer you different types of insurance at the time of your rental, which will cover most (not all) damage. Options may include supplemental liability protection, personal accident insurance, personal effects coverage, or loss damage waivers. Nevertheless, if your own liability insurance has minimal coverage, it may be smart to purchase supplemental protection at the rental counter to boost your coverage. The price of these types of insurance may be pricey, but it is worth it especially if you do not carry your own insurance, and it is a very convenient option to avoid personal liability.

automobile rental agreementCollision Damage Waiver. Many car rental companies will offer you a Collision Damage Waiver (CDW) or a Loss-damage waiver (LDW) at an additional cost when you are renting the vehicle. The fee is about $20 per day on top of the rental fee. While this waiver may protect the renter from having to pay for repairs to the vehicle itself, it does not apply to any personal injuries or damage to another vehicle. The waiver covers only the rented vehicle and means that the rental company waives its right to pursue you for damage. This type of waiver is rather limited. Typically, it will only cover repairs to the vehicle’s bodywork, but it does not cover damage to windows, mirrors, tires, engine, interior, etc. Further, this type of waiver does not cover reckless behavior that causes damage, such as drunk driving or speeding.

Insurance through your credit card. In some instances, if you use a credit card to rent the vehicle and the card is in your name, the credit card company may provide some type of rental protection. However, many of these protections are considered secondary insurance, meaning that you would have to first file a claim with your auto insurance before getting the credit card coverage. If you are uninsured, this secondary insurance may become primary, but it will likely have more limitations.

Travel Insurance. While this type of coverage is not as common, most traditional travel insurance policies provide some type of car rental coverage. However, there are limits on them, so it is always important to check your policy before you rent.

Personal Car Insurance. Most car insurance will cover your rental vehicle as well. But, do not assume that your personal car insurance will always provide you coverage if you are involved in an accident in a rental. You should check your policy to make sure property damage to your rental car is not excluded, how much coverage is in place, and whether certain types of specialty vehicles are restricted or not.

Most states require each driver to carry minimum liability insurance to register their vehicle. In Louisiana, the required minimum amounts are:

– $15,000/ $30,000. This means that $15,000 is available for each person injured in an accident caused by the insured. The $30,000 is available for thee entire occurrence, but no person can get more than $15,000. So, if 5 people were injured, the $30,000 would have to be divided among 5 people, no one person could get more than $15,000.
– $25,000 for property damage per accident caused by the driver of the insured vehicle.

Liability insurance does not cover any damage to your vehicle. Liability-only coverage applies when you cause an accident to cover injuries and property damage sustained by the other driver. This basic coverage will pay for the medical bills, property damage, and additional expenses of drivers or passengers who are injured in a collision that is your fault, up to coverage limits. As a result, if you do not have collision coverage, your own personal insurance policy will not cover damage to your rental vehicle.

If you do, however, have full coverage, you have comprehensive and collision coverage on your policy. Collision coverage can pay for repairs to your damaged rental vehicle after an accident. You are still on the hook to pay your deductible, but it will cover damages to the car. Therefore, if your personal policy includes collision & comprehensive coverage, liability coverage, medical coverage, and personal effects coverage, then the additional coverage offered by the rental company would not be necessary. But again, it is always important to contact your insurance company to make sure all coverage extends to your rental vehicle.

Although Louisiana does not require drivers to carry this type of coverage, purchasing uninsured and underinsured motorist (UIM) coverage can further protect you if an at fault driver does not have car insurance (UM) or does not have sufficient insurance (UIM) to pay out your entire claim.

Whether you were the one at fault or not, Louisiana law prohibits any uninsured or underinsured party to an accident from collecting the first $15,000 of their bodily injury damages and the first $25,000 of property damages.

man in wreck

Just like any other car accident, the person responsible for causing the accident is usually liable for damages caused by the collision, and that does not change when a person is driving a rental vehicle. Depending on your type of coverage and whether you were at fault or not, you may be liable for damage caused to your rental vehicle, the other vehicle(s), and any personal injuries following an accident. Not only will the rental car company come after you for damage to the rental car, but the driver of the other vehicle may also sue you for personal and property damage.

Scenario 1

Suppose you cause an accident in your rental vehicle, but you do not have liability insurance.

Purchasing supplemental liability protection at the rental counter would have paid for the damages you caused to the other driver and their vehicle. Signing a Collision Damage Waiver would have waived the rental company’s right to pursue you for damage to the rental itself. However, if you did not purchase either of those from the renal counter and lack personal insurance, you will be personally liable for the damage to the rental car as well as the damages to the other driver.

Scenario 2
Suppose you are involved in an accident in your rental vehicle that was not your fault, but you do not have liability insurance.

Purchasing personal accident insurance at the rental counter would cover medical costs for you and any passengers in your rental during the accident. Again, signing a Collision Damage Waiver would have waived the rental company’s right to pursue you for damage to the rental itself. However, because the accident was not your fault, the other driver’s insurance policy will pay for your injuries and damages, only if your injuries and property damage exceed the threshold of $15,000 for the value of your injuries or $25,000 for the value of your car.

Scenario 3
Suppose you cause an accident in your rental vehicle, and you have personal liability insurance but chose not to purchase any additional insurance from the insurance company.

Because you have personal liability insurance, your insurance will pay for injuries and property damage sustained by the other party. If you have minimal liability insurance and did not purchase additional insurance from the rental company, the driver not at fault may come after you personally for the damage if they do not hold UIM coverage and your policy does not cover all of their expenses. Additionally, if you have full coverage, it will also cover damages to your rental car. If you do not have comprehensive and collision on your own policy, and do not have the CDW, you will personally have to pay for the damages to the vehicle you rented.

Scenario 4
Suppose you are involved in an accident in your rental vehicle that was not your fault, and you have personal liability insurance but chose not to purchase any additional insurance from the insurance company.

Because the accident was not your fault, the other driver’s insurance policy will pay for your injuries and damages. Although it may be a good idea to purchase additional insurance from the insurance company to boost your coverage, it is not necessary. However, if the at fault driver was not covered, you may make a claim with your own insurance company assuming you have uninsured motorist coverage.

Scenario 5
Suppose you are involved in an accident in your rental vehicle that was not your fault. The at fault driver did not have any liability coverage, but you have UM coverage under your liability policy.

Because you were not the at fault driver, your liability insurance is not at play here. Typically, the other driver’s insurance policy will pay for your injuries and damages if they were at fault. Because the at fault driver was not insured, you may have to make a claim against your own insurance company if you carry uninsured/underinsured motorist coverage. UM coverage can pay for your personal injuries or property damage to your rental caused by the uninsured driver. If you do not carry UM, it will be difficult to recover from the at-fault driver.

Scenario 6
Suppose you are involved in an accident in your rental vehicle, and both you and the other driver have your own liability insurance.

In this situation, the driver not at fault would make a claim against the at fault driver and have the at fault driver’s insurance company pay out any personal or property damages. Your UIM coverage may be in play here too.

As an aside, the only time a rental car company will be liable for damages and the uninsured driver is off the hook is when it is proven that the rental company failed to properly maintain the vehicle, or knew about some dangerous defect associated with the vehicle which caused the accident.

Further, when you travel out of the country, it is especially important to know the coverage included in your policy and any exclusions before leaving for your trip. Your auto insurance policy may not apply to damages when an accident in a rental car occurs in a foreign place. It is imperative to know if coverage exists. If it does not, you will want to purchase any insurance offered by the rental car company that will give you both liability coverage as well as UM/UIM coverage.

Remember, it may be worth it to buy additional coverage at the rental counter if you do not have insurance, your insurance policy comes with low coverage limits, or you just want some peace of mind and do not mind paying the additional cost.

cliff cardone new orleans attorneyIf you or a loved one has been involved in an accident, and would like to discuss your case, call us today for a free consultation! PHONE CARDONE at 504-522-3333, 225-706-3920 (Baton Rouge office), 1-888-892-2736 (toll free) or email us at ccardone@cardonelaw.com.

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