Expert: Richard Hixenbaugh - 11/17/2010

Question
I am sure you've heard the saying "the cheap comes out expensive."  And how true it is.  

My uncle who is very cheap rented a car and went out of state. On his return home from his trip he was involved in an accident he rear ended the guy in front of him.  My uncle rented the car and he didn't get renter's insurance.  I said you didn't pay the 10.00/day insurance he said no.  He said  he is making a claim with his own insurance company and I said oh then you must have full coverage then.  He replied no only liability I said I don't really think the insurance is going to cover it then he said I don't think so either.  He even checked his credit cards to see if he signed up for the renter insurance programs that they offer he didn't.  He knows he'll be stuck for the damages but is there any other recourse that could be done?  Could he file a claim with his home owner's insurance?  Or is he out of luck?

My other question is this he thinks the damage is going to be around 10 grand that's if the insurance decides not to total it.  But according to my Uncle there is front end damage and apparently pieces of metal from the vehicle in front of him some how got into the engine.  He said the engine was running but not very well.  It sounds like they will most likely total the car it seems like there is to much damage to repair the rental car.  He said well if that is the case it would probably cost him 16 grand.  But I know that they will get the blue book value of the car so he may get a rude awakening on that one.  My question is will the rental company want the blue book value on the car all at once in a lump sum?  Or would they allow him to make payments?  If they want a lump sum how would they collect the money?  He does have a condo that's paid off and a home that he is still mortgaging.

Answer
Hi Malahni,

Unfortunately, your uncles homeowners insurance will not pay in this situation. He would have to have auto insurance with comprehensive & collision coverage. If he used a credit card to pay for the rental car there may be some coverage there that he should check into, but, most of them only provide deductible coverage when your auto insurance pays.

Once all is settled and they decisde if the car is repairable or totaled, the rental car company will send him a bill. He can question the amounts and should demand an itemized accounting of all of the costs they are asking for. Once an amount is agreed upon, he can request a payment plan. It is also possible the rental company will request payment in full. They may also file suit against your uncle to get a judgement against him. That way they will have legal recourse if he does not make a payment.

I hope this helps
Richard Hixenbaugh