Many renters believe that when you get a rental vehicle, their spouse/17 year old/next door neighbor/cousin can drive it too.  Most people don’t think twice about tossing them the keys.  But what happens if they are in an accident?  Are they covered?

The fast answer is “not always”.

Your state may have laws that permit a spouse to be an authorized driver regardless of whether or not they are present at the time of the rental.  Others believe it is defined by the wording in the rental agreement. Your rental contract should have clear definitions about who is considered an authorized driver, regardless of state regulations.  Your rental operation should not allow drivers under a certain age to use the vehicles (as permitted by law).  Rental agreements should state that all “authorized drivers” must be present at the time of the rental for them to be covered.  There can also be provisions for an “emergency driver”.  An emergency driver is someone not on the rental agreement who steps in and drives the vehicle in a true emergency situation, such as the renter becoming medically incapable.

What happens if someone in your renter’s family, not listed on the rental agreement, takes the keys without permission and gets into an accident or worse, steals the car?  Who is responsible for injury or damage to others?  It is important for your renter to read and understand the rental agreement.   Perhaps explain this at the time of the rental.  The renter may end up being fully responsible for damages to others and even damages to the rental vehicle outside of their personal insurance or your rental insurance. Sometimes their personal insurance will cover these expenses, but depending on the circumstances, they may not. Your insurance as the rental dealer works differently than personal insurance does and may exclude these types of coverage claims.

What if the renter purchases any additional insurance offered by your rental agency?  Most of these contracts also exclude coverage when an unauthorized driver causes the claim.

Another aspect of this issue is when an authorized driver participates in an activity that is either illegal or against any prohibited activity defined in your rental contract. Common prohibited activities can include racing, driving under the influence, off roading, etc.  These activities could, in essence, exclude them from any coverage under your rental policy, any additionally purchased insurance or their own personal insurance.

The bottom line is to make sure you and your renter understand these issues so you can have a successful operation.