Spring is almost here- believe it or not! Technically speaking, March 21st is the first official day of Spring and it’s just a few weeks away! With the arrival of spring comes an increase in outdoor adventures, festivals, and spring break trips. For those who happen to be driving, rather than flying, on their spring break excursion there are a couple of items that should be added to your packing checklist. Specifically, if you will be driving your car, in addition to checking the oil and tires, you’ll want to double check your auto insurance policy to ensure you have roadside assistance on your policy. Roadside assistance is a coverage that, if in place, can save your trip and really help your wallet as well. Roadside assistance, sometimes called towing and labor, does exactly what it sounds like- provides assistance in the event that you end up stuck or broken down along the road. This coverage will cover a tow to a shop or location to repair damage- whether it is a blown tire, engine trouble, or more. Depending upon the carrier and the level of roadside assistance opted for on the policy, you may even have coverage for lock outs and trip interruption- which can cover items such as hotel and food while the vehicle is being repaired. All of these perks can really be a trip saver, as well as a wallet saver.
If you happen to be renting a vehicle for your spring break adventures, here is some knowledge to consider. I am often asked the question, “should I buy the rental car company’s insurance, or does my policy cover the rented vehicle?”. The answers, simply put, are yes and yes. More specifically, yes, your auto policy will cover the rented car (within the continental United States – always check with your carrier on details regarding Mexico and Canada) within your policy limits. This means that if you have liability on your auto, you will have liability extended to the rental car. If you have liability and property damage coverage on your auto, you will have both liability and property damage coverage (subject to your deductible) extended to the rented vehicle. There are, however, gaps in coverage that exist in this situation. Specifically, there are two gaps- lost wages/income and pre-negotiated sale price gaps.
At this point, you may be saying, “huh?”, so let me explain.
Lost wage/income gap refers to the possible situation where, if you have rented a vehicle and you have an accident, while the vehicle is being repaired it cannot be rented out. Let’s say that during this same time the rental agency has no other cars to rent out and therefore loses money due to not having this vehicle available. Your insurance would not cover this gap and you would be responsible for it. In terms of a sale price gap- let’s say that the rental agency has a contract with an auto dealership, which states that they will buy the rental car from the agency on a set date at a set price (say $10,000). Now let’s say that the accident you have in the car totals it, and at the time it is totaled, the blue book value (or the payout value) is less than that pre-negotiated sale price, you would be responsible for that difference. So, to put numbers to it- if the dealership contract was for an agreed $10,000 but the payout after the accident was $8,000, you would be responsible for the other $2,000. While there are some carriers- such as MetLife, for example- that do cover loss damage waiver and lost wages, many (perhaps even most) do not. For these reasons, although there is coverage that extends to a rented vehicle, we always advise that, yes, you should be sure to check with your agent to specify whether or not these gaps are covered on your policy and, if not, purchase the rental agency’s insurance. Ultimately,our duty is to advise our clients of their risk exposure. The decision of which risks to retain and which to pass to your insurance company lies in your own hands.
Now that you’re armed with knowledge (and we all know knowledge is power!), wrap up that packing list and get on your way!
“You’re off to Great Places!
Today is your day!
Your mountain is waiting,
So… get on your way!”
― Dr. Seuss, Oh, The Places You’ll Go!
Until next time – may every sunrise bring you renewed purpose and ever increasing joy.