Renting a Replacement Car is Not the Same As Renting a Car for Leisure

May 18, 2005, Washington – Consumers who need to rent a replacement car after an accident or if their car is stolen may be surprised to find out that it is not the same as renting a car for business or leisure, according to the Insurance Information Institute, a non-profit education organization. In addition to having a limited number of options, there are different conditions.

“When an auto insurance claim is involved, various factors are used to determine the kind of car you can rent, as well as who will pay for the rental car,” said Carolyn Gorman, vice president of the Insurance Information Institute in Washington, D.C. “The bottom line is that renting a car as part of an auto insurance claim involves rules, from establishing which driver was at fault to determining the kind of car that can be rented and which driver’s insurance will cover the cost, if at all.”

To help insured drivers understand more about auto insurance, I.I.I. is working with the Consumer Protection Association of America on a nationwide public information campaign entitled, “Wiser Drivers Wise Up (www.wiserdrivers.com).” The campaign educates drivers on what they need to know before an accident, and how that knowledge can save them time and money after an accident.

“For example, because it can take a week or more for law enforcement to establish which driver was at fault in a collision involving two or more vehicles, there can be a significant delay in getting a replacement rental car as quickly as you need one,” said Gorman. “In addition, different options on your own auto insurance policy can affect the ease and expense of renting a replacement car in an emergency.”

Gorman says the only way insured drivers are guaranteed to immediately get a replacement rental car when they want one is by including this optional coverage on their own auto insurance policy, which is only a couple dollars a month. If the collision ultimately is determined to be the other driver’s fault, the cost of the rental car is usually by the other driver’s insurance.

According to industry estimates, a car damaged in an auto accident is in the repair shop for an average of two weeks, and it can take from two to four weeks for an insurance company to authorize the purchase of a new vehicle after a theft. Not only can it be inconvenient to be without a car this long, it can also end up being expensive for drivers who can end up spending as much as $500 to rent a replacement car while their own car is being repaired.

Consumers Would Rather Rent Than Borrow
"This is an issue that potentially faces a very large percentage of our population," Gorman said. She cited a recent independently conducted nationwide survey of people 18 and over that demonstrates the scope and magnitude of losing the use of a car for two weeks or more.

According to survey results, more than 8 of 10 insured drivers said the loss of their vehicle after an accident or theft would be disruptive to their lives. The study also indicates that, as a group, single women 35 and under would find it most disruptive to their lifestyle.

Gorman cited another survey finding: When asked how they'd most likely get around while their vehicle was being repaired, the first choice of most survey respondents (39.6 percent) was to rent a car rather than borrowing a car or carpooling. "That's why it’s such a good idea for people to understand how their own auto insurance policy can make it easier and a lot less expensive to rent a replacement car in an emergency," she said.

Tips on Planning for Emergencies
Unlike renting a car for business or leisure, where you can reserve a car in advance and choose from a wide range of models, the options for renting a replacement car as part of an insurance claim are generally more limited. Different conditions can apply, no matter which driver’s auto insurance policy may be covering the cost for a replacement rental car, or if the cost is covered by insurance at all. In addition, it is important to be aware of other considerations, such as the following:

• Many drivers assume that if they are involved in an accident, there is a good chance it will be the other driver’s fault and his or her auto insurance will cover the cost of a replacement rental car. However, depending on how quickly the other driver notifies his or her insurance company, how timely a police report is filed, and how fault is determined, it could be several days or longer before the authorization is issued.
• There are things insured drivers can do to avoid waiting for authorization from the other driver’s insurance company. For example, check your own insurance policy or call your agent to see if you have rental car coverage, which pays for your rental car while your own car is being repaired or if it is stolen. Some insurance policies automatically include this coverage; others offer it as an optional coverage for only a couple dollars a month. Having replacement rental car coverage on your own policy entitles you to automatically get a rental car, regardless of how long it takes to settle with the other driver’s insurance company.
• Payment options for a replacement rental car can vary, depending on whether it will be covered by your own or the other driver’s insurance. It is a good idea to find out if the rental car company can bill the insurance company directly, so you don’t have to pay out-of-pocket. No matter how payment is made, keep copies of all receipts to address any future questions.
• When you need a replacement rental car, check your telephone directory for a rental car company that is close to you. Consumers might find neighborhood or non-airport rental car locations a better bet, since they won’t have to pay airport taxes or surcharges.

The Insurance Information Institute (www.iii.org) is a non-profit, communications organization supported by the property/casualty insurance industry.

SOURCE Insurance Information Institute