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Do I have Coverage for a Rental Vehicle? (The New York Answer)
Jeff Ryan - CLU, ChFC, AIA, CIC, CPCU
January 13, 2023
Know the Limitations to Make a Smart Decisions
Those who are a Named Insured on a New York Personal Auto New Insurance policy, enjoy a unique benefit.
Coverage for a rental car is included whether or not you have comprehensive or collision coverage!
Where does this perk come from? Coverage is afforded by a New York State required, "Rental Vehicle Coverage Endorsement". This endorsement is in response to Section 3440 of the Insurance Law.
The Rental Vehicle Endorsement (see your policy for details) associated will outline:
- Coverage is provided for the insured's obligations in the event of actual damage to, or loss of, any "rental vehicle”.
- including loss of use, rented by the "insured"
- anywhere in the United States, its territories or possessions, and Canada
- under a rental agreement with a term no longer than thirty continuous days”
The language in this endorsement provides broad coverage and includes nearly all types of physical damage to a rental car, except for fraudulent acts.
Per the New York Department of Financial Services opinion, coverage is expected to include additional costs that rental car companies sometimes attach to a loss, such as diminution of value, loss of use, rental fees, and administrative fees. Coverage is also provided without regard to the policy limits of liability to which the endorsement is attached!
ANY REASON TO CONSIDER OTHER RENTAL CAR COVERAGE?:
Unlike auto insurance coverage from other states, there are reasons why New York Auto Insurance Policyholders may want to consider the purchase of a rental car company’s damage waiver - or - have alternative rental car coverage in place. But, here are a couple:
- Renting a Car Outside of your policy’s
“Operating Territory”:
All coverage is excluded while renting a car outside of the United States, its territories and possessions, Puerto Rico and Canada. Purchasing Damage Waiver, Liability and Personal Accident Insurance options would certainly be prudent while renting a vehicle outside the places mentioned above. - 30 Day Limitation
The endorsement limits coverage to a rental of no more than 30 days. - Loss of Discounts and Addition of Surcharges:
Claim payment under the Rental Vehicle Coverage Endorsement is considered a loss under the Auto Policy's Liability coverage part. Rental vehicle losses can negatively affect safe driver and claims free discounts. Some at-fault losses can also result in a surcharge. See below for some potential solutions:
BONUS: For those who would like to prevent rental car mishaps from affecting their claims record there are alternatives:
- Credit Card with PRIMARY Rental Car Coverage:
Some credit cards (usually fee based cards) offer the opportunity for
PRIMARY rental car coverage.
- American Express offers Premium Car Rental Protection:
For a flat fee per rental (starts at $19.95), Amex's "Premium Car Rental Protection"[4] provides primary rental car coverage for most types of damage including loss of use. The agreement also provides some accident coverage. - VISA cards are also available that have PRIMARY coverage.
Finding credit cards that offer primary coverage[5][6][7]is a little more work. Be sure to read the fine print! - Important Note #1: MANY credit cards provide EXCESS rental car coverage. Meaning, coverage is collectible only as excess over other insurance. Your auto insurance would be primary, thus excess coverage would require a claim be presented to your NY auto policy.
- Important Note #2: Diminution of value, administrative fees do not appear to be part of the plan and may have to be paid by the cardholder.
- Sources for finding Cards with Primary Coverage
- https://thepointsguy.com/guide/cards-rental-car-coverage/
- https://www.nerdwallet.com/article/credit-cards/credit-card-rental-car-coverage
Bottom Line, the Rental Vehicle Coverage Endorsement is a significant "perk" of being a New York Auto Insurance policyholder, however be sure to know the limitations and alternatives.
Frequently Asked Questions About Do I have Coverage for a Rental Vehicle? (The New York Answer)
Do I have rental car coverage under my New York auto insurance policy?
Yes, all New York auto insurance policies are required by law to include rental car coverage through the "Rental Vehicle Coverage Endorsement." This coverage applies whether or not you have comprehensive or collision coverage on your personal vehicle.
What does the Rental Vehicle Coverage Endorsement cover?
This endorsement provides broad coverage for physical damage to a rental car, including loss of use, anywhere in the United States, its territories, Canada, and Puerto Rico. Coverage applies to rentals up to 30 days.
Does the Rental Vehicle Coverage Endorsement have any limitations?
Yes, the endorsement has a few limitations:
Geographic Restrictions: Coverage only applies within the US, its territories, Canada, and Puerto Rico.
Rental Duration: Coverage is limited to rentals of 30 days or less.
Impact on Auto Policy: Claims filed under the endorsement are treated as liability claims on your auto policy, potentially affecting discounts and surcharges.
Why would I consider purchasing additional rental car coverage?
While New York's mandatory coverage is comprehensive, you might consider additional coverage if:
Renting Abroad: You are renting a vehicle outside of the US, its territories, Canada, and Puerto Rico.
Long-Term Rentals: Your rental exceeds 30 days.
Avoiding Premium Increases: You want to prevent a potential increase in your auto insurance premiums due to a rental car claim.
What are some alternatives to using my New York auto insurance for rental car coverage?
Credit Cards with Primary Coverage: Some credit cards offer primary rental car coverage, meaning they pay first before your auto insurance. This can help avoid premium increases on your auto policy.
Rental Car Company Damage Waiver: You can opt to purchase a damage waiver directly from the rental car company. However, this is often more expensive.
Where can I find credit cards that offer primary rental car coverage?
Websites like The Points Guy and NerdWallet provide comprehensive lists and reviews of credit cards with various travel benefits, including primary rental car coverage.
What are the benefits of credit card rental car coverage?
Primary Coverage: Prevents claims from impacting your auto insurance policy.
Potential Cost Savings: Could be more cost-effective than purchasing a damage waiver from the rental company.
What should I keep in mind when considering credit card rental car coverage?
Coverage Terms: Read the fine print and understand the specific coverage details and exclusions of your credit card.
Excess Coverage: Many credit cards offer only secondary or excess coverage, meaning your auto insurance would be responsible for the primary claim.
Additional Costs: Some expenses like diminished value or administrative fees might not be covered by your credit card.
"Do I have Coverage for a Rental Vehicle? (The New York Answer)" Deep Dive Podcast
The content in this article, including the podcast and FAQ, was created by the staff at The Ryan Agency, with portions generated using artificial intelligence. This information is for general informational purposes only and should not be relied upon as professional advice. For guidance specific to your situation, please consult your policy documents and an insurance professional. The Ryan Agency, Jeff Ryan, and our staff expressly disclaim any liability for actions taken or not taken based on this content without consulting your policy or an insurance professional.
This article may have been originally published at Quora.com.
To see Jeff's Quora.com profile click here.
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