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When your insured rents a car is the coverage provided by his/her personal auto policy primary or excess? The reality is, there is no one answer. The answer is a function of state law. Policy wording makes the PAP excess, but the rental agreement makes the insured’s PAP primary. Since there is disagreement, we have to turn to state law. Does state law require the rental car company to provide coverage to the renter? If so, then the PAP is excess; if not, the PAP may be primary (because excess of nothing (as stated in the rental agreement) is primary).
“Should I buy the damage waiver?” A question you probably receive from your clients on a regular basis. What do you tell them? Is it worth the money?
Several years ago, I wrote an article called ''The Top 10 Reasons to Purchase the Rental Car Company's CDW/LDW.' This article and a downloadable consumer version you can share with your clients has now been updated to include yet another reason for purchasing the CDW/LDW. It's called 'diminution of value' and it could cost your personal and commercial lines insureds THOUSANDS of dollars.
We had an insured call to advise that he was going on vacation and renting a car in his name. He has a 19 year old that he understands cannot drive the rental car, by the rental car company's requirement. However, he is planning on letting the 19 year old drive the car anyway. His question was would his personal auto policy respond. I guess my common sense might be getting in the way of the legal application of the policy, but I hesitated to say yes because he is clearly in violation of a written contract. Would the personal auto policy respond?
Although most damage waiver fees are considered outrageous, the insured is best advised to purchase the waiver for short-term rentals. This is not only in the best interest of the insured, but also the agent since an inadequately covered loss may result in the loss of an account or worse, an E&O claim.
Zipcar is an innovative alternative to traditional car rental. The company describes itself as a “car sharing” company instead of a car rental company. The company currently operates in multiple metropolitan areas and hundreds of college campuses, has a fleet of thousands of cars and hundreds of thousands of members, and recently expanded internationally. If your insured drives a zip car, does his or her PAP extend coverage? Does s/he even need PAP coverage?
​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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