Most rental car coverage simply extends your regular vehicle coverage. As a result, only you, a spouse, a resident relative and a ward or foster child — as listed on your personal auto policy —are covered.
The majority of insurance companies do not cover ‘Diminished Value’ — also known as the rental car gap. Rental companies reserve the right to sell their vehicle as is if you damage it. For example, if you rent a car that is worth $21,000.00and you are involved in an accident, the rental company can sell that vehicle as is for $15,000.00. Your insurance company will pay for the full repair cost of $4,000.00, for a total of $19,000.00. Since this is $2,000.00 less than the original value of the vehicle, the diminished value you owe to the rental company is $2,000.00. Cases of diminished value occur frequently and are usually upheld by the court.
Most insurance companies have adjusted by offering additional coverage options, but not all of them address the problem of diminished value. At this point in time, only a few insurance companies offer decent coverage for the rental car gap. Talk with your agent to make sure that you are adequately covered.
Another option is to try calling your credit card company, because many of them offer coverage for diminished value. Otherwise, you can always take the insurance from the rental company. However, rental companies often self-insure, which allows them to decline claims for simple reasons like negligence.
The information provided here relates to general situations and questions concerning specific risks and may not apply to all situations or individual circumstances.
If you have any questions, please contact me or call me directly at 616-723-8025.
The information provided here relates to general situations and questions concerning specific risks and may not apply to all situations or individual circumstances. Detroit Insurance does not issue insurance contracts or bind coverage. We do not endorse or recommend any companies or insurance policies, and we do not provide insurance, tax or financial advice.