DOES YOUR CAR INSURANCE COVER A RENTED VEHICLE?

Not checking ahead can be an expensive mistake, Lorraine Sommerfeld writes.

A Toronto man recently discovered a nasty — and unfortunately increasingly frequent — surprise: the pickup truck that had just been in his driveway had vanished. The 2022 Ram 1500 Hybrid would be high on a thief's wish list; the global lust for highend North American trucks and SUVs has never been greater.

But the headline wasn't about escalating theft. It was about the fact the stolen truck hadn't been properly insured; he'd rented it from a major car rental company.

Upon renting the vehicle, the driver assumed his current car insurance would extend to the rented one. He was partly right in that the coverage he had was extended to a vehicle he rented. What he didn't factor in was that he was inadequately insured and what worked for his previous vehicle wasn't going to cover him on the fancy rented rig. Now the rental agency is informing him he owes them $50,000.

Insurance is a complicated transaction we take for granted when we shouldn't. It's a lot like driving itself. Everything is fine until it's not, and when it's not, the results can be frustrating at best and catastrophic at worst.

While insurance is mandatory, it is overseen by provincial governments and regulated by entities like the Financial Services Commission in Ontario. Within those rules and wordings and requirements are optional coverages. Decisions you make in one arena can have unexpected consequences in another, as this renter found out. While he had the mandatory liability coverage on his personal policy, he'd opted out of the part of the OAP 1 that says, “you may buy coverage to protect you against loss of, or damage to, your automobile caused by collision, fire, theft and a variety of other unpredictable risks.” Emphasis on “may.”

It's not uncommon to remove that coverage with an older car that often wouldn't be worth fixing. People do it to save money all the time. But when it comes to renting something else, it means you have to take the additional coverage offered by rental outfits. We rent cars for vacations; we rent them to move; we rent them when our vehicles are in the shop.

“Renting a vehicle to move personal items is automatically covered under the OAP1 but follows the coverage on your policy. If you have liability only, then physical damage is not covered (collision and comp),” says Debbie Arnold, a broker with Sound Insurance.

The fine print is always a rabbit hole, but if you're renting a vehicle you need to delve down into at least three of them: your own insurance policy, the insurance offered on the rental contract (check their websites), and the section of your credit card that may pertain to rentals. Lots of expensive mistakes get made.

The $4,000 hail damage not paid because the credit card coverage didn't apply to pickup trucks; the nearly $19,000 damage charged to a customer who rented a Home Depot van and discovered after connecting with a deer that Home Depot doesn't insure their vehicles. By the way, that deer strike would fall under the optional comprehensive coverage, so you can see how fast someone could be in trouble.

With very little exception, Canadian automobile insurance only covers Canada and the U.S. “If you're renting a vehicle in Mexico or any other country, you have to purchase the insurance offered by the rental company. If you're driving into Mexico, you have to purchase insurance for your vehicle at the border! Your Canadian policy will not cover you there,” says Arnold.

Pay very close attention to who is legally allowed to drive your rental, and list anyone who might be. There is a weight restriction on your personal policy of 4,500 kg on rental vehicles, as well. If you're heading out in many

RVs, you need to purchase their insurance.

If you're taking advantage of your credit card's coverage, remember you have to book and pay for the rental with that same card, and credit cards often rule out certain vehicles like pickup trucks and UHauls. They also have time limits and most won't insure a rental with an MSRP of $85,000 or more — as prices climb, that doesn't represent as much vehicle as it used to.

If a rental vehicle is on your radar, call your broker and ask how to make yourself bulletproof in the eventuality of anything.