If an Insured Rents a Car and Damages It, Does a Deductible Apply to the Rental Vehicle’s Physical Damage Coverage?
Question: “If an insured rents a car and damages it, does a deductible apply to the rental vehicle physical damage coverage?”
Answer: No. The New York Rental Vehicle Coverage Endorsement is a coverage separate from physical damage coverage on a personal auto policy. The coverage is required by state law, and the text of the endorsement is set by a Department of Financial Services insurance regulation. See the DFS Office of General Counsel advisory legal opinion of June 2, 2005: “The insured’s claim would not be covered by the collision portion of the policy and would not be subject to any deductible.”
New York
INSURANCE LAW — CHAPTER 28 OF THE CONSOLIDATED LAWS
Article 34 — INSURANCE CONTRACTS – PROPERTY/CASUALTY Ins. Law s 3440
Insurance covering private passenger motor vehicles; rental vehicle coverage
(a) For the purposes of this section, a “private passenger motor vehicle” is a motor vehicle:
(1) of the private passenger or station wagon type that is owned or hired by an individual or by husband and wife under a long-term contract and is neither used as a public or livery conveyance for passengers nor rented to others without a driver; or
(2) with a pick-up body, a delivery sedan, panel truck or van, owned by an individual or by husband and wife who are residents of the same household or by a family farm co-partnership or a family farm corporation, and not customarily used in the occupation, profession or business of the insured other than farming or ranching, whether or not used in the course of driving to or from work.
(b) Subject to subsection (d) of this section, every motor vehicle liability insurance policy which insures less than five private passenger motor vehicles registered in this state shall by endorsement, provide coverage for the obligation of the insured for actual damage to, or loss of, vehicles (including loss of use) rented by an insured in the United States, its territories or possessions and Canada under a rental agreement with a term of thirty continuous days or less, regardless of where within those areas such rental vehicle is registered, rented, or operated, subject to such maximum coverage limitations as the superintendent may by regulation prescribe or any other applicable limits in the policy, whichever is higher. The term “rental vehicle” shall be used as defined in section one hundred thirty-seven-a of the vehicle and traffic law, if a private passenger motor vehicle and not used for the transportation of persons or property for hire.
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