Good evening, future Claim Reps ! You all have impressed me with your knowledge of auto insurance. But tonight's question is going to be a real test. Yep, it's a toughy. But don't be shy, give it a shot. Whadya have to loose ??

You own one car with the following coverages:

100/200/200, Comp 200, Collision 250, Rental 80/500.

You're car is in the shop for mechanical repairs and you rent a car from Joe's Jalopies. They convince you to purchase their Physical Damage coverages with the following deductibles:

Comp 500, Collision 500.

While driving the rental car, you take a curve too fast, loose control, and strike a fire hydrant. There are $3,000 in damages to the rental car.

1. How much of the damages are covered by the insurance you purchased from the rental car company ?

2. How much of the damages are covered by your own auto policy ?

3. How much are you going to pay out of pocket ?

4. Who's going to reimburse the local fire department for that hydrant you wiped out ?

 

Ruh-roh... made this one too difficult ?!

 

Does the Joe's coverage include liability?
What are the exclusions listed in the Joe's coverage? ie. fine print.

 

No, you only purchased physical damage coverage with them (comp and collision).

Exclusions from Joe's coverage do not apply.

 

I guess I'll take a swing at it then.


1. How much of the damages are covered by the insurance you purchased from the rental car company ?

Zero.

2. How much of the damages are covered by your own auto policy ?
All as long as the Hydrant replacement is not over 200K.


3. How much are you going to pay out of pocket ?

$250

4. Who's going to reimburse the local fire department for that hydrant you wiped out ?

My insurance up to the 200K limit. Anything over is all mine to pay.

 

K, here's my SWAG. I'm assuming that my insurance company is going to act as a supplimental insurer in this case since I bought specific insurance for the vehicle.

1. How much of the damages are covered by the insurance you purchased from the rental car company ?

2500

2. How much of the damages are covered by your own auto policy ?

250

3. How much are you going to pay out of pocket ?

250

4. Who's going to reimburse the local fire department for that hydrant you wiped out ?

Taxpayers

 

The city/state is gonna send you a bill for that hydrant. It will be the last one, after you thought you had everything all finished.

 

I'm not going to wait to my normal 9:00 EST schedule to post the answers to this one as there have only been 2 and a half brave souls that attempted it (thanks for playing and good tries).

Okay, the key to being able to answer these questions is knowing that when two insurance policies apply to the same vehicle for a given loss (insurance rep word for "accident"), then you have to determine which one is PRIMARY and which one is EXCESS.

In this case, because you bought coverage from the rental company for their car... their coverage is Primary. Your own insurance policy is, therefore, Excess.

This being a Collision claim, that is the coverage that applies. So...

1. Remember, the rental car's coverage is Primary here. So, of the $3,000 damage to the car, the rental car company's coverage is going to pay all but your $500 deductible. So the answer is $2500.

2. Because your own policy is Excess and your deductible is lower than the collision deductible you purchased from the rental company, your insurance company will pay the difference in deductibles, or $250.

3. Yep, you have to pay the rest... $250.

4. The fire hydrant is property, right ? Sure, it is. And you are liable for the damages to it, right ? Sure you are. So, doesn't it make sense that your Property Damage Liability coverage would apply to the hydrant ? Sure it does. So your insurance company will pay for the hydrant. Hey... I've seen some pretty odd property damage liability claims. A few months ago, I sent a check for $550 to a farmer for a Heifer that one of our policyholders killed when he plowed into a pasture.


By the way, you wasted money buying the rental company's comp and collision coverage. You didn't need it since your own policy has that coverage. The only time that's needed is if you have an older car and decide not to carry any comp and/or collision coverage on your vehicle.

 

I hope a fire hydrant doesn't cost more than $200,000 !

 

Maybe you can clear up a question as long as we are talking about insurance on rental cars... Recently I was in Orlando visiting my brother. I rented a car and the counter gal put the hard sell on me for the insurance.

I'm used to the hard sells, and I always say 'no'. However, the counter gal told something I had never heard before. She said that if I get into an accident, my insurance might cover the car, but the rental car company will come after me for the lost revenue; then she proceeds to tell me that my insurance won't cover that!

This sounded like a bunch of bull dung to me... Of course I didn't take the coverage, and I probably won't rent from that company again. The entire sales pitch left a bad taste in my mouth... But the real question: was she right???

Thanks,
Ed

 

Well, either Counter Girl is a highly trained marketing genius, or she's an uninformed doofus. Probably the latter. But I do give her credit for knowing there is such a thing as a Lost Revenue claim.

Yes, the rental company can make a claim for money they lost because they lost money by not having the car available to rent while it was being repaired.

But whether you take out *their* insurance or not, your own insurance coverage will take care of it.

Personally, I've never seen a successful Lost Revenue claim from car rental agency. That's because we require them to prove that they had no other rental cars available during that time AND they had customers they turned away due to not having cars.

 

Excellent! Now I want to go back to her and rent a car just to throw it back in her face!!!

As always, the information is greatly appreciated!

-Ed