Renting a car can be incredibly confusing. Various kinds of fees, along with waivers or insurances, can more than double the expected cost of your rental. On top of that, sometimes one of your credit cards claims they will cover the costs of accidents, implying that you don’t need to purchase the extra insurance or waivers offered by the car rental companies. Or, perhaps you’re not sure what your own personal automotive insurance covers when it comes to rentals. Automobile accidents are upsetting enough when it’s your own car. A rental can enormously complicate matters.
Car Rentals Are Big Business
Car rental companies generate a lot of money. In 2015, the annual US revenue for all car rental agencies amounted to more than $27 billion, with 2.18 million vehicles rented out to you and me. Companies keep large numbers of vehicles, called fleets, to serve the needs of customers.
With regard to charges, there is a base rate to which other costs are added, such as state and local taxes. On top of that, optional coverages are offered and often are called insurance, although technically they are not insurance. The four basic kinds of optional coverage are:
- Collision Damage Waiver (CDW), also known as Loss Damage Waiver (LDW), covers the cost of repairing the damage to the rental car if an accident should occur. Where these two waivers are offered separately, CDW covers damage that occurs while the vehicle is moving (i.e., a collision), and LDW covers other damage to the vehicle, such as vandalism.
- Supplemental Liability Protection (SLP), also known as Supplemental Liability Insurance (SLI), covers the renter for any personal liability incurred when an accident damages property or causes bodily injury to people in other vehicles.
- Personal Accident Insurance (PAI) covers the medical and ambulance costs and death benefits for the renter and passengers in the rental vehicle in case of an accident.
- Personal Effects Coverage (PEC) insures the renter’s and passengers’ personal belongings inside the rental car against theft or damage, up to a certain dollar amount.
By the time you arrive at the rental counter, it is best to know whether you want to purchase any of these coverages. Often, you are already covered for many of these situations by your personal automobile insurance policy. However, don’t assume; make sure you know what your coverage is by checking your personal policy before you rent a car.
Be aware that your personal auto insurance will not cover any deductibles when it comes to your rental car’s damage or theft loss. Nor will your insurance cover any “loss of use” charges, meaning that the rental car company can charge you for the income they lost because the car was not available to other renters due to repairs. You may be charged for other fees and costs as well, depending on what your policy states.
Major credit cards often offer coverage as long as you use the card to pay for the rental. Sometimes the coverage is secondary, meaning it kicks in only after your primary insurance has paid their share. Again, make sure you are clear on what coverage your credit card offers if you plan to use it.
If you do not own a car, or otherwise do not have a personal automobile policy that covers rentals, you might consider purchasing the CDW/LDW, SLP, and PAI coverages to prevent the potentially enormous bills if you are involved in an accident.
In case you were wondering—car rental companies do make money by offering these policies, but it is not the primary source of profits for them.
What Happens in the Event of an Accident?
An accident while you are driving a rental car has the same ground rules as any other car accident. You should call the police, obtain medical treatment for those injured, trade information with the other driver, move vehicles out of the way of traffic if they can be moved, locate witnesses, and so on.
With regard to paying for damages to the rental vehicle, it all depends on the insurance you are using. If you purchased CDW/LDW coverage from the rental car company, keep in mind that your coverage could still be declared void if you broke any conditions in your rental agreement or if you broke the law while driving. Some examples of conditions under which your coverage could be revoked include:
- Driving recklessly or negligently
- Driving while impaired
- Driving in a location where you are not authorized to drive (such as in another state)
- Driving on an unpaved road
- Allowing a driver not authorized on the rental contract to drive the car. You can be held liable for the damage an unauthorized driver does even if you don’t give them the keys, but leave the keys in a place that they can access. Violating the unauthorized driver provisions of a rental car contract generally revokes any liability protections and makes the renter responsible for all financial costs, penalties, and fees.
If you do not purchase CDW coverage, the Federal Trade Commission’s stance is that, by doing so, you automatically assume responsibility for any and all damages, up to the full value of the car.
When Could the Rental Car Company Be Liable?
A new federal law went into effect on June 1, 2016 that puts legal responsibility for an accident on the rental car company if they did not repair any open safety defects before they rented out the vehicle. Any company with a rental car fleet larger than 35 vehicles is prohibited from renting out unrepaired recalled vehicles, and the National Highway Traffic Safety Administration’s investigative and punitive powers now cover rental car companies and vehicular recalls. Thus rental car companies could be legally responsible for an accident if the rental car had not been properly maintained or if it had an unrepaired safety defect that contributed to the accident.
When life goes wrong, we fight for what’s right.
If you or a loved one was injured in an accident that involved a rental car in South Carolina, it is important that you consider seeking legal help to navigate the complexities of the law. A rental car accident can have many parties, including insurers for the renter and for the other driver, the rental car company, and even the credit card company. An experienced Columbia, SC car accident lawyer can help you hold the necessary parties to their end of the bargain and collect the compensation you are entitled to. At the Louthian Law Firm we have defended the rights of accident victims and other injured South Carolinians since 1959, and we’re committed to providing personalized service to you while aggressively going after wrongdoers. And because we know how financially devastating an accident can be, we never charge you a dime until your case is won.
For a free initial consultation of your rental car accident case, call us at 803-454-1200. If you prefer, you can also fill out our online contact form.