Archive for November, 2010

Rental Cars

Friday, November 5th, 2010

If there was only one thing that I would hope for, one thing that each and every one of my clients could get out of my input here, it would be to add rental car coverage to their policy, if they haven’t done so already. That is, of course, if they don’t have a back-up vehicle. We repeatedly have customers who’ve been involved in a collision, that believe they have full coverage, only to discover that their full coverage lacks any provision for a rental car. As a result, they find themselves in a real bind while their car’s under repair.

What the heck, anytime you exercise your insurance policy you’re going to need wheels, right? So why shouldn’t rental coverage be a part of being prepared? But then there’s the argument about the added cost. Okay, that’s true, but my experience is that most carriers will add rental car coverage for under $100/year (with some as low as the $60’s). So, using the $100 number, that’s a little over 8$ a month. One day of rental in a “roller skate” can easily run you around $24/day. Oh yeah, I should add that most auto body repairs will take 2-3 days, minimum. The price will vary per region and season, but the average cost of a collision claim here in San Diego has often hovered around $3K. If you happen to pick your phone up and call body shops in your area, don’t be surprised if you hear that a three thousand dollar repair, as a rule of thumb, will take approximately 3 weeks ($1k in repairs = 1 week down time). Now this time element can obviously be affected a great deal with the type of parts required, nature of the repair, etc. It’s not an absolute benchmark for projected down time. It’s just a very rough guideline that you’ll tend to hear. Why do I mention it? Well, because if it happens to apply in your own situation, then there’s a decent chance that you’ll be without your car for three weeks (uh-oh!).

Most policies available from insurance companies will provide a rental car for 30 days, maximum. That’s a huge asset when you’ve been hit and are going to be without your car. You should probably also know that if you are hit here in California by another party, state law requires that they supply you with a car for the entire length of the repair. There is no 30 day rental limit applicable when it’s the other guy’s fault and his policy’s paying for your rental vehicle.

If you’ve read my total loss section, then you already know that many insurance companies will begin to consider a vehicle a total loss when repairs breach 70%-80% of the vehicle’s value. At the lower 70% number, a $20K vehicle could easily end up having a $10K repair done to it. In a case like this, you can begin to see that even a 30 day rental car resource may run out before the car’s done. A local shop did a repair on a BMW for over $60K. They had that car f-o-r-e-v-e-r. In situations where there’s a larger repair, we’ve seen several individuals who’ve activated their rental car coverage, and then negotiated with the rental car outfit and their carrier to drive a cheaper car for a longer period of time. Not every insurance company will allow for this, so you’ll need to check and see if it’s available, if the need arises.

Whether you or an insurance company’s paying when you rent a car, you’ll be asked at the rental company if you’d like to buy their insurance, to cover you while driving their car. It wouldn’t hurt for everyone to know if they’re already covered by their existing policy while they rent a car. Most are. Even so, especially if it’s only for a few days, whenever I rent a car I personally opt to buy the portion of their coverage that will pay to fix their vehicle in the event I happen to wreck it. I tell the rental people, whenever purchasing this additional coverage, “Okay now, if I hit a tree down the road with your car, I want to be able walk back in here, hand you your keys and tell you to go get your car. And I want all of this without it costing me or my insurance company a nickel.” When they hear me say this they’ll usually look at me a bit funny and nod their heads. I, on the other hand, smile and initial the contract in the appropriate place, secure in the knowledge that I’m free to drive an unfamiliar car with a measure of confidence that (in my opinion) actually reduces accidents.

While at the rental agency, don’t be pressured into hurrying through the walk-around, especially if you don’t buy their insurance. Make sure that you indicate to their personnel every place that you can see that’s scratched or dented on the car you’re about to rent. Should you show back up with some damage that’s not been documented, the rental car manager’s position will be that if it’s not on the check-out paperwork, then you must’ve done it while you drove their car.