Rental Vehicle Covered by Personal Auto Policy?

Q

We have the auto insurance for an insured who will be renting a vehicle for a period of at least four months while he is out of state on business. He will be renting the vehicle in his own name. Will his personal auto policy extend coverage for the use of the rental vehicle? What about physical damage coverage?

What is the best way to arrange coverage in this situation?

Colorado Subscriber

A

The ISO personal auto policy (PAP) promises to pay damages for which the insured is legally liable because of an auto accident. There are, however, exclusions which could well apply in your insured's case, particularly the exclusion of liability coverage for the use of any vehicle “furnished or available for [the named insured's] regular use.” While most insurers do not consider the occasional use of a rental vehicle to be “regular,” in this case the length of time argues that the vehicle is for the insured's regular use.

We would suggest that the extended non-owned coverage for named individual endorsement be added. This endorsement eliminates this exclusion. It is frequently added when an insured is furnished a company car, and also has owned vehicles. Liability coverage is thus extended for the company car.

Insofar as physical damage coverage, we recommend that the insured purchase the coverage offered by the rental agency. Since the vehicle is furnished or available for the insured's regular use, it falls outside the definition of a “non-owned auto” and therefore outside the physical damage coverage normally provided for rental situations.

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