Should You Purchase Insurance When Renting a Car?

November 29th, 2012, 10:12 AM

When you rent a car, the rental company typically offers the option of purchasing insurance to cover damage to the auto. This is often called a "loss damage waiver". Some people opt not to purchase this auto insurance based upon the assumption that their own car insurance policy will provide full coverage for damage to rental vehicles. However, this is not always a correct assumption.


In Benson v. Budget Rent-A-Car, Benson did not purchase the Budget loss damage waiver when he rented his car. He believed that any damage to the rental car would be covered by his own auto insurance policy or by insurance provided under his credit card. Benson was then in an accident while driving the rental car. The estimated cost of repair was $5,481.08. Benson's own car insurance company had calculated the cost of repair to be $5,577.35 and it agreed to pay this amount, minus Benson's insurance deductible of $500.00, for a total of $5,077.35. However, Budget was not required to accept this payment. The Budget car rental agreement provided that Budget had the option of either repairing the vehicle or selling it at auction. If Budget chose to sell the damaged car at auction, then the rental customer would be obligated to pay Budget the difference between the retail fair market value of the car and the proceeds of the sale. Here, Budget selected this option and the difference between the retail cash value and the sales proceeds was $8,954.87. Budget also demanded an additional $256.00 for towing and administrative fees for a grand total of $9,210.87. Additionally, Budget demanded $426.93 for loss of revenue arising from the temporary loss of one of their rental vehicles. The Court ruled that Benson was obligated to pay Budget the difference between the estimated retail fair market value of the car and the auction proceeds. The Court found that the Budget contract was enforceable and that it provided an acceptable manner of determining the costs to be paid when the renter opts not to purchase the loss damage waiver. Thus, Benson would be obligated to pay the difference between the amount paid by his own car insurance ($5,077.35) and Budget's demand.


This is an example of what costs you may be required to pay, even when your own insurance policy provides property damage coverage for rental vehicles. Of course, you also need to determine whether your own car insurance policy covers rental vehicles before you can make an informed decision as to whether to purchase property damage coverage from the car rental company. Pennsylvania car insurance law is very complicated and it is often difficult to navigate safely. If you have a question regarding auto insurance claims or your entitlement to car insurance benefits you should call or contact the Elderkin Law Firm. Call (814) 456-4000 to speak with Robert C. LeSuer or Craig A. Markham at the Elderkin Law Firm in Erie, PA and to arrange for a free consultation concerning your questions about accident claims. Your initial meeting with one of the attorneys in our Erie, PA office is absolutely free and is without any obligation to hire us. We will provide you with a free initial evaluation of your case and will answer your questions about the law. If you choose the Elderkin Law firm to represent you, you will pay no fee unless we are successful in obtaining compensation for your injuries and losses. In such a case, our fee will be calculated as a percentage of the amount of the settlement or award.

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