Fact or Myth: If the other car is at fault in an accident their insurance company will pay for your rental: Myth (sometimes). While reputable insurers will usually pay for your rental, it’s no longer automatic. Case in point: Our customer’s parked car was hit by another car while the other car was backing up. Sounds like a pretty straightforward case of the other car being at fault so they should pay for the rental, right? Not so fast. The other car was insured by one of the large national carriers (cute lizard, anyone?). The other car had $5,000 Property Damage coverage which is the part of the policy that pays for damage to the other vehicle, including a rental car if necessary. The other insurance company will not authorize a rental car for our customer until they are certain that damages won’t go over $5,000 and then they’ll reimburse for a rental at whatever rate they determine (even though our company adjuster has seen the car and the damages are less than $1,000). The vast majority of insurers have traditionally included $100,000 Property Damage limits on all policies because the difference in premium between the $5,000 State minimum limit and the $100,000 limit is less than $20 per year. The big nationals that are now writing in MA don’t care nor do they explain the difference.
We also had an insured who left us two years ago and placed his car insurance with Flo, he named his own premium and ended up with a policy with $5,000 Property Damage limits on it. He hit another car causing $8,000 in damage. The other vehicle's insurance company is requesting reimbursement for the remaining $3,000 and it's now in collections.
The moral of this story is if you want rental (or other) coverage do not rely on the other person’s policy to pay if they’re at fault. Also, make sure you know what the limits on your own policy are.
Posted Friday, July 15 2011 11:48 AM
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