Cars Above a Certain MSRP
It is possible you only have part coverage. Many car insurance policies extend to rentals, but some of them limit the amount to the price of your own car. Cars above a certain MSRP, $100,000 on some policies, may be covered only up to the value of your personal car. If you drive a Subaru, that matters.
It usually starts out in your favor: you are covered by your personal policy at the same limits and deductibles as your regular car. But that coverage might not be enough. If you have comprehensive and collision coverage for your personal car, it extends to the rental. If you don’t — perhaps you drive an old junker — you are not covered for damage to the rental car itself. Liability may cover you if you hit someone else, even if you do not carry damage coverage for your personal car.
But a $500,000 Ferrari may be beyond the policy limit. Two insurers have a California-specific clause that addresses this directly: Progressive California endorsement A340, and GEICO form A30CA. A rented car with an MSRP over $100,000 may be covered only to the ACV of your own car with the highest value. If you only have one car, a paid-off sedan, it works like this: you rent a $180,000 car for the weekend, and then total it in a crash. Your policy pays only for the total loss limit — the insured value of your personal car. So your company mails a check for the value of the sedan and the rest is up to you.
Yes, you read that right: one dollar over $100,000 is subject to the restriction. This is a cliff, not a slope. Yes, that is MSRP, not its value after a year or two of driving. Depreciation is not your friend. Any car stickered at $140,000 in 2016, depreciated down to $60,000 when you crash it, is still subject to the coverage limit in that GEICO policy.
Many people don’t know about this provision. It isn’t on the card that you carry in the glove compartment. Its buried in the policy paperwork. You would be hard pressed to find a customer service representative who has read the entire contract. On a call, the insurance phone rep is searching a database. The database returns a sales summary. The agent reads the high points, agrees with you. That’s the extent of insurance company’s solemn oath. It isn’t worth much. Ask the agent “Will you pay for the ACV of this $500,000 Ferrari?” If she is noncommittal, clarifying the wording rather than addressing the car’s value, then you may have a problem.
GEICO’s California contract has some other quiet limits. Rental periods over 30 consecutive days are excluded. Can you circumvent the 30 day rule simply by renting anew every month? No. The calendar — not the number of different contracts — determines the length of time. Monthly renters are on edge. So are anyone who rents cars frequently. You may not be covered. Adding cars as part of the declarations solve this. Policies like this are excess coverage: they expect you to exhaust the coverage provided by the rental car company itself. The GEICO California contract, form A30CA, denies payment for “diminished value.” Repairs bring back functionality, but not resale value.
Credit cards may promise extra coverage for car rentals, but there are plenty of limits. Chase Sapphire Preferred cards exclude cars with MSRP over $125,000, including Rolls-Royce, and Ferrari. Get in an accident in that $500,000 Ferrari and that card is no help whatsoever. Cards may cover only damage, not liability.
Federal law is on the rental company’s side. The Graves Amendment bars state laws from imposing liability on the car owner just for putting it on the road. Different States impose minimum requirements. New York requires drivers to have $25,000 per person liability coverage, $50,000 per accident and $10,000 property damage. That seems fine — until the other driver is in the hospital.
As for the MSRP cap, one large insurer’s contracts had no apparent cap. When a policyholder had a claim on a $500,000 Ferrari, it paid the whole loss. The limit is not universal. Read your own contract.
New York limits how much you owe for damages. New York laws limit it to the lesser of the cost of repairs or the market value of the car at the time of the accident, minus any salvage. You don’t owe for loss of use or administrative fees. In New York you can choose to have the claim sent to your insurer directly. New York law allows you to inspect rental damage within 72 hours of the car’s return.
If you rent a car in Miami and get in an accident, the state of Florida has something to say about insurance. In Florida, the rental company’s liability and PIP coverage is primary unless the contract says otherwise, in 10-point type.
To find out what your policy covers, try these steps: Get your auto policy “declarations page” from your insurer. That is a summary with all the details on coverage: policy limits, deductibles, extra coverage. The card in your glove compartment is just for the police, not for you. Read the list of endorsements, extra pages added to the contract. Read all of the ones that apply in your state. Make a note of the form numbers and ask an agent to send you copies of them. Read them and see if they limit coverage for rental cars. Long rental? You can add cars to your insurance, the same way you would add a new car you just bought.
Before you put the keys in your pocket, read the whole insurance contract. Congratulations on renting a $500,000 car. Enjoy the drive.