Car Insurance Issues for Travelers

You may need to have insurance coverage if you travel with a vehicle you don’t own. Here are some examples.

1. Even if you choose to travel by airplane, train, or buses, once you reach your destination, you will likely want to rent a vehicle.

2. You might know someone who would let you temporarily drive their car while they are away.

3. You might want to drive to your vacation spot. Even if you have an excellent, insured car that drives well, you might still want to rent a car so your vehicle doesn’t get any more wear.

4. You might be an employee and the vehicle is leased or owned by your employer.

5. Sometimes, you may have to drive the company’s car for business purposes.

6. If you’re on business-related trips, your employer will pay to rent a car.

I cannot tell you whether you have insurance coverage. You must read your insurance policy and all the exclusions. Then, you can determine which insurance coverage you have. Worker’s compensation might also be applicable if you’re an employee who is on a business trip and drives a vehicle owned by your employer or rents one. But I’ll also point out important points that you need to be aware of.

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If you’re driving a company vehicle, calling your insurance company or agent to find out what coverage you have is the best way to determine your vehicle’s non-owned or rental coverage. If you are planning to rent a vehicle from your credit card, make sure to ask them. You should ask your credit card company whether they offer insurance coverage when you rent a vehicle using their credit card. Also, be sure to specify the type and limits of that coverage.

FIRST, employees who drive company vehicles should be aware that not all company vehicles can be insured by insurance companies. Some vehicles are Self-Insured. Different rules apply to employees who drive company vehicles. You should ask your employer to inform you of this before they give you keys. However, if they don’t, it is worth asking. You should also find out if your employer insures anyone other than your employee to drive your company vehicle, and if you are allowed to drive it outside of your state.

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For 17 years, I worked as an insurance claims adjuster in Los Angeles. Both the appraisers, managers and adjusters drove company cars. All of us were made clear by the company that only employees and their spouses had the right to drive company cars. We were permitted to drive the cars for both business and personal reasons. If we wanted, we could also drive the cars outside of California. Employees were not allowed to permit their teenage sons and daughters to drive the company vehicle. This was true for their parents, their neighbors, their siblings, cousins, other family members, or their friends.

We had four main responsibilities as adjusters. The second was to investigate and determine liability. This included determining how much was attributed to the claimant and how much was owed to the insured. Third was to determine the damage including bodily injury and property damage. Fourth was to either deny or try to settle the case.

Without insurance, the rest of your life is pointless.

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Drivers of vehicles must have permission from their vehicle owners to drive them. This can be illustrated by saying that even though you have full coverage on a vehicle you own, if someone steals it and causes bodily injury, death, or property damage to any claimant(s), your insurance policy does not cover the car thief.

SECOND, when renting a car, you must give the name and license of everyone who will be driving it to the Rental Car Company. If you intend to drive the car rental out of state or country, it is a good idea for you to tell them. Don’t assume that insurance will automatically transfer if you rent a vehicle from another country. Once you cross the border into another country, your insurance coverage may be void. This information should be obtained from your insurance company.

You may have heard that personal car insurance automatically transfers to a rental vehicle. This is often false. You might see the terms “Non owned vehicle” and “Temporary Substitute vehicle” on your insurance policy. Some policies clearly distinguish between them. Other policies make it clear that you must read all the fine print to be able to distinguish the two.

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If you are unsure about anything, ask your insurance agent. Different insurance policies are written in different ways. The general meaning is that your vehicle becomes undriveable or unsafe to drive. If your vehicle is in need of repair or maintenance, or if it is damaged or lost in service, you can rent a vehicle temporarily to replace your insured vehicle. Normally, coverage will transfer from your vehicle and the rental. It is important to check with your insurance to see if the rental vehicle must be rented from a Public Automobile Rental Agency. If so, you can also ask about reimbursements for renting vehicles from friends. The way your policy is written may affect whether it transfers the entire policy limit or reduces coverage to the minimum state liability requirements. Another important thing to know is whether liability coverage or collision and total damage transfers.

On the other hand, this means that coverage may not transfer to if you rent an automobile while on vacation. There is nothing wrong in having your own insured vehicle in a perfectly good driving condition sitting in your driveway at your home. Or your spouse or children are driving it at your home. Is it really possible that your insurance company will cover two vehicles at the same price? Ask them.

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If you own an insured vehicle that is in good condition and can drive, and you plan to rent a car while on vacation or on business, you should call your credit card company first. They will be able to provide rental car insurance coverage. There are many credit card companies that provide insurance coverage for rental cars if you use your credit card. To avoid any confusion, you should always contact your insurance company to find out what coverage they offer for renting a car. Also, ask how it is transferred.

THIRD: If you visit relatives or friends while on vacation, you need to determine if the same coverage limits apply to them or if the coverage is reduced to the minimum liability requirements of the state if the friend is the driver.

Don’t let the long list exclusions from the Medical Payments coverage scare you. It is also known as Med Pay and covers injuries suffered by all occupants of an insured car, including the driver and passengers. It does not cover “General Damages”, such as pain and suffering, but only “Special Damages”, such as medical and dental bills.

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Med pay may cover you regardless of whether you’re a driver or passenger in a qualified, non-owned vehicle. You should check with both your own insurance company, and the insurance company that covers the vehicle. You might find one primary and the other supplemental, or excess. There are rules that limit and prohibit duplication of coverage. Med Pay could help pay thousands of dollars for your medical bills.

Want to learn the inside story behind insurance claims offices? You will always be asked if you don’t have coverage for something. In unusual situations, I witnessed intense arguments between adjusters and supervisors about whether or not coverage should be confirmed or denied. You can get two completely different opinions if you have a defense and claimant attorney sitting in the exact same room. Or 2 different United States Supreme Court Judges sitting in the exact same room. You might be financially benefited by someone’s error, so it is important to ask questions and take action as soon as possible.

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