Rental Car with Factory Defect and Insured Liability

An auto policyholder with a proper endorsement rents a car and declines collision coverage. While driving the vehicle, the transmission seizes apparently due to a factory defect. The damage should be covered under the vehicle warranty but the car rental company holds the renter liable due to the terms of the contract. Is there any way the auto policy can respond? 

Indiana Subscriber

In the situation you describe where the insured has assumed, via contract, all liability arising from use of the rental, his auto policy would not respond.

Because the insured was driving a non-owned auto (the rental), this situation is no different than if the insured was driving his own vehicle and the transmission seized.  His auto policy's exclusion for mechanical breakdown would preclude coverage for damage to the engine.

 

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