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When you rent a car, the company will usually ask if you want to take out an additional insurance policy that they provide.. To most renters, that might sound like just another way to get more money from the consumer. After all, if you have auto insurance, then it will cover you if you are driving in someone else’s car. However, before you say “no” to the additional coverage, you should know what it might cost you if you are involved in a devastating accident that isn’t covered by your insurance.
The Graves Amendment
Missouri adheres to something called “vicarious liability,” which means that if you have permission to drive someone else’s car and you are at-fault in an accident while driving that car, the owner of the car is responsible and liable for paying for all the damages and injuries that result. Because rental agencies are in the business to make money, if they had to incur the cost of everyone who is in an accident in their rental cars, they couldn’t operate. So, the federal government initiated the Graves Amendment.
The Graves Amendment overrides state law and says that if a company is in the business of lending out vehicles for a profit, then they are not held liable if the vehicles that they rent out are in an accident. For rental vehicles, vicarious liability does not apply.
Personal Auto Insurance and Rental Cars
In most cases, your insurance coverage will pay if you are at-fault in an accident. Although it depends on the individual policy, in most instances an insurance company will cover the driver. So, if you are driving in a rental car, unless your policy excludes rental car coverage, you would likely be covered by your insurance. Before you decide to assume that your company will pay, it is best to look at your policy or to call before you drive a rental car to know for sure.
The problem with driving a rental car is that, depending on what type of coverage you have, there are times when the insurance company will pay for the other driver’s injuries and damages as well as your injuries if you are at-fault in an accident, but not for any damages done to the car you are driving. This is where it gets tricky.
Unless you have the addition of comprehensive or collision insurance on your coverage, the cost of repairing the rental car might be your responsibility. Depending on how severe the accident is, that can be financially devastating. That is why it is important to check your individual policy to find out what you would and would not be on the hook to pay for if you are at-fault in a rental car accident and to determine if taking out the additional coverage is a waste or a good idea.