Rental Car Insurance: Are You Paying for Coverage You Already Have?

By Samuel G. Johnson, Esq.

Introduction:

It’s not every day an attorney tells you to decline insurance coverage for a potential loss.  Well brace yourselves, because that is exactly what I am going to do in this article.

Whether your car is in the shop for repairs or you are taking a long vacation far away from home, chances are you have rented a car and will do so again.  Given your experience renting cars, you are familiar with the exchange that will likely take place each time you step up to the counter to rent a car. You are given the rental contract, but before you sign on the dotted line the salesperson is pushing hard for you to elect certain additional coverages for your vehicle, such as a Collision Damage Waiver.  They invoke fear by explaining the expenses you could incur in the event of an accident if you decline the Collision Damage Waiver and you damage the rental vehicle. Fear not, they tell you, because for an additional cost of anywhere from $10.00 to $30.00 a day—depending on your location and the rental company—you will not have to worry about incurring these potential expenses.

So should you purchase the Collision Damage Waiver for your rented vehicle? In that moment not having previously considered the question, and given the compelling sales pitch from the agent behind the counter, you may not feel confident in your answer. On the one hand, you are a responsible driver and don’t want to pay­­­­ what could be upwards of $30.00 a day extra for the Collision Damage Waiver. On the other hand, accidents happen, that’s why they are called accidents, right?  Even an extra $30.00 a day is far less than what you would have to pay if you somehow damaged the rented vehicle.  So what do you do?

Decline the Collision Damage Waiver!  Chances are you already have coverage for this type of situation, and despite the compelling sales pitch from the agent behind the counter, you do not need to purchase the Collision Damage Waiver. It is important to note at the outset that the answer to this questions is not one size fits all. There are several considerations you should undertake before making your decision. This article, however, should equip you with the tools needed to confidently answer this question when the time comes.

What is a Collision Damage Waiver?

So what is a Collision Damage Waiver?  Despite what you may think, it is not insurance.  It sounds like you are paying for coverage on the vehicle, but a Collision Damage Waiver, or a Loss-Damage Waiver, is actually what the name implies, it is a waiver. What this means is for the additional fee the rental company waives its right to pursue you in the event there is damage to the rented vehicle or it is stolen.  Sounds like a good deal right?  Although such a waiver may sound like all-encompassing protection, be aware of the fine print.

Most Collision Damage Waivers contain limitations and exceptions.  For example, the damage or loss will likely not be covered if the vehicle is driven by someone who was not listed as an authorized driver, the driver has consumed any alcohol—whether or not he or she is over the legal limit—or the car is driven in a careless or reckless manner. While these don’t sound like limitations that would be difficult to avoid, consider the following hypotheticals:

The Single Glass of Wine Hypothetical:  It’s another cold winter in Maine, so you and your spouse decide that it would be nice to take a trip somewhere warm, so you book a week-long vacation in Florida.  After your flight lands, you step up the counter to rent a car.  After a compelling sales pitch from the agent, you decide to purchase the Collision Damage Waiver from the rental company, sign on the dotted line, and rush out to check in to your hotel. After you get settled in you and your spouse head out for a nice dinner.  At dinner you have of a glass of wine.  After dinner, while leaving the parking lot, you back up into a light pole and damage the bumper and frame of your rental car.  Although you are not over the legal limit, because you had a glass of wine at dinner you are likely on the hook for the damage despite purchasing the Collision Damage Waiver.

The Designated Driver Hypothetical: Consider the same hypothetical with a slight twist.  Before leaving dinner you remember that you will not be covered for any damage caused to the rental vehicle because you have consumed alcohol.  Even though you are not over the legal limit, you have your spouse who has not consumed any alcohol drive.  While leaving the parking lot they back up into a light pole and damage the bumper and frame.  Again, despite your spouse being a licensed driver, you are likely on the hook for the damage despite purchasing the Collision Damage Waiver because you did not list your spouse as an authorized driver.

            Even if you determine that these situations are avoidable and you would like the Collision Damage Waiver, don’t check that box just yet.  You may already be covered, and that coverage would likely protect you in the two hypotheticals discussed above.  To determine if you already have coverage you will want to consult your personal auto policy.

Where to look:

All motorists in Maine are required to carry, at a minimum, liability and uninsured motorist coverage. Typically, there are four potential coverages available in a personal auto policy.

  • Mandatory Liability Coverage insures the owner of an automobile for damages he or she becomes legally liable for due to bodily injury or property damage caused by an accident of the insured vehicle.
  • Medical Payments Coverage covers medical expenses incurred because of bodily injury that is sustained by an insured and caused by a motor vehicle accident.
  • Mandatory Uninsured Motorist Coverage covers the insured for compensatory damages for bodily injury that the insured is legally entitled to recover from the owner or driver of an uninsured motor vehicle. In Maine, this coverage must match the motorists liability limits.
  • Physical Damage Coverage covers damage or loss to the covered vehicle itself. Typically, there are two types of Physical Damage Coverage that an insured can elect to carry, Collision Coverage and Comprehensive Coverage. Collision Coverage covers loss stemming from the upset of the covered vehicle or its impact with another vehicle or object.  Comprehensive coverage is often defined as other than collision coverage, meaning damage to the vehicle stemming from something other than upset or impact with another vehicle or object.

So are you already covered?

Chances are, depending on your personal auto policy, you are already covered for damage to the rented vehicle. In ascertaining whether you can decline a Collision Damage Waiver when renting a vehicle due to existing coverage, you will need to look to the Physical Damage Coverage section of your personal auto policy.  It is important to note that this type of coverage is not required, so the first thing you need to determine is if you carry this type of coverage.  If you do, great, you may be one step closer to confidently declining the Collision Damage Waiver.  What should you be looking for if you do carry this coverage?  Here are a few excerpts from different personal auto policies:

Example 1:  The standard ISO Policy includes an endorsement with language pertaining to rented vehicles, and provides coverage for “direct and accidental loss to any “non-owned auto which is a private passenger auto, pick up or van, or trailer, rented to you or any family member for a term of 45 continuous days or less, by any person or organization, including franchises, in the business of providing private passenger autos, pickups, vans or trailers to the public.”  This coverage applies to direct and accidental loss to a rented vehicle and equipment, minus the applicable deductible, caused by collision or other than collision so long as that coverage has been elected by the insured.

Regarding loss of use expenses, the endorsement provides that the insurer “will pay, without application of a deductible, for verifiable loss of use expenses that are for a continuous period of up to 30 days and for which [the insured] becomes legally responsible in the event of loss to a rented vehicle.”  If the loss is caused by other than theft, the coverage is limited to the period of time reasonably required to repair or replace the rented vehicle.

If you elected this coverage, and you verify that your present circumstances fall within definitions outlined in the policy, a Collision Damage Waiver is unnecessary.

Example 2:  Other policy language from a major auto insurer states that if you carry Collision Coverage, the insurer “will pay for sudden, direct, and accidental loss to a covered auto . . . or a non-owned auto, and its custom parts or equipment resulting from a collision.”  The policy defines a non-owned auto as “an auto that is not owned by or furnished or available for the regular use of you or a relative while in the custody of or being operated by you or a relative with the permission of the owner of the auto or the person in lawful possession of the auto,” and defines collision as “the upset of a vehicle or its impact with another vehicle or object.”

If you have Comprehensive Coverage, the insurer will cover loss to a non-owned auto that is not caused by collision.  The policy then lists the types of damage that qualify as not caused by collision.  If you elected to carry Comprehensive Coverage under this policy, the insurer will also pay for loss of use damages that you are legally liable to pay if a non-owned auto is stolen up to a combined maximum of $900.00 not exceeding $30.00 per day.

Again, if you have elected this coverage a Collision Damage Waiver is likely duplicative of the coverage you already have, and have already paid for.

Example 3: The last example, from a national auto insurer, states that if the insured elects to carry Collision Coverage the insurer “will pay for collision loss to the owned auto or non-owned auto for the amount of each loss less the applicable deductible.”  The policy defines collision loss as “loss that is caused by upset of the covered auto or its collision with another object, including an attached vehicle.” Non-owned auto is defined by the policy as “an automobile or trailer that is not owned by or furnished for the regular use of either you or a relative, other than a temporary substitute auto.  An auto that is rented or leased for more than 30 days will be considered as furnished for regular use.” If the insured elects to carry Comprehensive Coverage, the insurer will pay “for each loss, less the applicable deductible, that is caused by other than collision to the owned auto or non-owned auto.”  The policy then lists losses that qualify as other than collision.

This policy, too, will provide coverage for damage to a rented vehicle, less the applicable deductible, so long as the vehicle is not rented for more than 30 days and the damage falls within the definition of a collision or other than collision. No Collision Damage Waiver is needed.

Deciding whether your policy provides coverage necessarily requires determining first if you have elected to carry Physical Damage Coverage.  This information will be contained in your policy’s Declarations Page.  Then you must determine whether the rental vehicle qualifies as a covered auto under the definitions provided by your policy.  This will require cross-referencing the specific coverages with the definitions provided by your policy.  Lastly, you should check if any limitations or exclusions apply to the Physical Damage Coverage.

After reviewing your personal auto policy if you are still unsure whether you are covered for damage to a rented vehicle, you can always call your insurance agency to ask about coverage for rented vehicles under your policy.

Additional Considerations:

As mentioned previously, the answer to whether you can decline a Collision Damage Waiver is not one size fits all.  There are additional considerations you should make.  For example, if you do not have a personal auto policy, the Collision Damage Waiver or some other form of coverage is advisable.

Depending on your policy, what appears to be a covered loss may nevertheless be excluded.  For example, if you are using the rented vehicle to conduct business many policies seek to exclude coverage for the loss.  Even with coverage, you will likely have to pay a deductible in the event damage is caused, that amount, depending on the length of your rental, may far exceed the price of the Collision Damage Waiver.

Another consideration is your location.  Many personal auto policies do not provide coverage if you are renting a vehicle outside of the United States or Canada.   Additionally, some policies provide coverage for loss of use while others may limit the amount covered or exclude it entirely.  This means that a rental agency could potentially come after you for the loss of use of the vehicle while it is out of commission even though your policy covers the actual damage to it.

Conclusion:

With this information you now know where to look to determine for yourself whether you are already covered for potential damage to a rented vehicle.  You have reviewed your personal auto policy or spoken with your insurance agent and can feel confident when you step up to the counter and are met with the fear-inducing sales pitch from the rental company.  If you have elected to carry Physical Damage Coverage, you are likely already covered, and you can confidently decline the Collision Damage Waiver and spend your $30.00 a day on something you will enjoy, rather than coverage you already have.

Jonathan W. Brogan Admitted to the American College of Trial Lawyers

Jonathan W. Brogan, a member of the law firm of Norman, Hanson & DeTroy, LLC, has become a Fellow of the American College of Trial Lawyers, one of the premier legal associations in America.

Brogan, who concentrates his practice in litigation, was recently inducted into the College during the association’s 2018 annual meeting. Fellowship in the College is extended by invitation only — and only after careful investigation — to those experienced trial lawyers who have mastered the art of advocacy and whose professional careers have been marked by the highest standards of ethical conduct, professionalism, civility and collegiality.

The College was founded in 1950 and is composed of the best of the trial bar from the United States and Canada. Lawyers must have a minimum of 15 years of trial experience before they can be considered for Fellowship. Membership is limited to no more than 1 percent of the practitioners in any state or province.

Brogan has more than 30 years of experience representing businesses and individuals in complex civil litigation matters. He has received numerous honors for his legal work, including recognition by Martindale-Hubbell, New England Super Lawyers, Best Lawyers in America and Chambers USA. Best Lawyers named Mr. Brogan “Lawyer of the Year” for medical malpractice — defense (2017) and personal injury — defense (2015, 2018).

Active professionally, he is a member of the Maine State Bar Association, Cumberland County Bar Association and is a fellow of International Society of Barristers and Litigation Counsel of America and a member of International Association of Defense Counsel.

WC Appellate Division Decision issued on February 16, 2018 – Res Judicata and Multiple Injury Claims

Two years ago the Appellate Division held in Eck v. Verso Paper, Me. W.C.B. No. 16-20 (App. Div. 2016) that the Board may determine that an employee has sustained more than one gradual injury to the same portion of the body.  This decision sparked concern among employers that multiple claims could be made in an attempt to obtain a finding of compensability of any injury occurring at some point over a broad spectrum of time.  In a recent decision the Appellate Division relied upon the established doctrine of res judicata to preclude redundant litigation in search of a compensable event.

In Bridgeman v. S.D. Warren, Me. W.C.B. No. 18-08 (App. Div. 2018) the employee filed a Petition for Award in 2001 alleging a gradual mental stress injury occurring on August 6, 1999.  The evidence included testimony of severe harassment in December 1994 that produced an emotional breakdown, and a Section 312 examination also referred to the December 1994 events.   In a 2002 decree the Board determined that the claimed injury had occurred, but that timely notice was not given.  Accordingly, the Petition for Award was denied.

Years later the employee filed another Petition for Award in 2011 alleging a gradual stress injury but asserting December 1, 1994 as the actual date of injury.  The same essential evidence of occupational stress was offered in the second proceeding as had been presented in the first.  The presiding ALJ found that the employee had sustained an injury on December 1, 1994 and awarded ongoing benefits for total incapacity.  The employer appealed to the Appellate Division, arguing that the claim was barred by res judicata.

The Appellate Division agreed and vacated the decision of the ALJ.

Whenever there has been a final decision in a litigated claim, res judicata prevents the re-litigation of the same essential claim in a subsequent proceeding.  The Division held that, notwithstanding the assertion of a new date of injury, “the matters presented for decision in the second action were actually litigated in the first”.  The Division found that the employee “has essentially repackaged a claim that the board rejected in 2002”, and that the claim in the second case was based upon the same operative facts that had been raised in the prior litigation.  Therefore, because the claim resulting in the 2002 decree was based upon the identical circumstances alleged in the second proceeding, the allegation that the employee had sustained a different injury on an alternative date was barred by res judicata.  Any other result, according to the Division, would both compromise judicial economy and undermine the stability of final judgments, and would require the employer “to mount multiple defenses over time against a single claim”.

Kelly Hoffman Has Been Selected as a Representative of Team USA in the 2018 FIH Masters World Cup

It is important to recognize the accomplishments of our attorneys both in and out of the courtroom.  When we learned Kelly Hoffman was named to the U.S. Women’s Masters Field Hockey training squad, we recognized this achievement in the “Kudos” section of our Summer 2017 newsletter.  We are elated to announce that after five months of practicing with the country’s elite field hockey players, Kelly was selected to travel to Terrassa, Spain in July as a representative of Team USA playing in the 2018 FIH Masters World Cup.  The biennial tournament will host more than 140 national teams expected to compete in five age brackets.  Kelly’s position on the Over-40 team is as a goalkeeper.

Since discovering field hockey during her Junior year of high school, the game has become a passion of Kelly’s.  She was the goalkeeper for both the Johns Hopkins University field hockey and lacrosse teams.  As a Senior captain of the university’s field hockey team, she was named All-American in part for record making career saves (452).  Kelly has continued to play on various leagues since college and even coached girls field hockey for a few seasons at the local private Portland school, Waynflete.  She continues working with young athletes as a referee for middle and high school games in southern Maine and a coach for the indoor club MAINE STYX.

This honor to represent the United States on an international playing field is also a huge comeback for Kelly who was diagnosed with Stage 3C breast cancer in 2012.  Now in full remission, Kelly told News Center Maine during an interview last fall, “Training again and getting out there and playing has been so good for my mind and my soul.  It’s brought me back full force into a sport that I do truly believe has gotten me to where I am today.”

She is looking forward to the World Cup where her wife, their twin daughters, and family will cheer her on.

WC Law Court Recognizes Credit for Social Security Retirement Benefits Paid in the Past

It has been recognized in several Law Court decisions that, generally speaking, there is no right to recover an overpayment of workers’ compensation benefits by taking an offset or by claiming reimbursement.  However, in a significant new decision, the Court has held that an employer is entitled to a credit for the value of Social Security retirement benefits paid in the past at the same time in which an injured worker also received workers’ compensation incapacity benefits.

In Urrutia v. Interstate Brands International, 2018 ME 24 the employer voluntarily initiated payment of benefits for total incapacity at a point when, unknown to the employer, the employee was already receiving Social Security retirement benefits.  He continued to receive workers’ compensation benefits unreduced by the Section 221 offset until the employer eventually learned of the Social Security entitlement. At that point the employer reduced its ongoing payments pursuant to Section 221, but by that time the employee had received over $24,000.00 in workers’ compensation benefits to which he was not entitled pursuant to Section 221. The employer sought a credit for the amount of the overpayment, and the ALJ granted the request.  However, on appeal the Appellate Division reversed and essentially held that the employer was not entitled to a retroactive credit for benefits overpaid, notwithstanding the language of Section 221 indicating that benefits must be reduced when Social Security retirement payments are received.  The employer then appealed to the Law Court.

In a 5-2 decision, the Court analyzed the language of Section 221 in detail and found that it “unambiguously entitles an employer to a credit based on an employee’s past receipt of Social Security retirement benefits”.  The Court cited the statutory injunction that incapacity benefits “must be reduced” to reflect the receipt of Social Security retirement income and that the credit is triggered when an injured worker is receiving “or has received” Social Security retirement payments.  The majority ruled that a refusal to recognize a credit would allow the employee to retain a double recovery of benefits in violation of the express intent of Section 221.  Therefore, the Court vacated the decision of the Appellate Division and ruled that “Interstate is entitled to a credit [in excess of $24,000.00] for incapacity benefit overpayments made to Urrutia during the same period when he received Social Security retirement benefits”.

The Court remanded the matter to the ALJ to determine “the specific terms of the credit and resulting payment holiday” to which the employer was entitled.

Steve Moriarty represented the employer on appeal.

WC Appellate Division Decision issued on January 17, 2018 – Multiple Gradual Injuries to Same Area

It had been determined by the Board that the employee sustained a gradual occupational injury to his right elbow on October 29, 2000.  Several years later the employee filed a Petition for Award alleging a second gradual injury to the same portion of the body occurring on May 8, 2009.  There was conflicting medical evidence as to whether or not a second injury had been sustained, and the ALJ found that the employee did not sustain his burden of proof.

In White v. S.D. Warren Company, Me. W.C.B. No. 18-02 (App. Div. 2018) the Appellate Division rejected the employee’s appeal and found that the ALJ committed no error in weighing the contrasting medical opinions in finding that the employee had not established a new gradual injury to the same portion of the body.  The existence of contrary medical opinion did not compel the hearing officer to find in the employee’s favor, and the ALJ’s decision fell within the range of her “sound discretion” and was not arbitrary or capricious.

WC Appellate Division Decision issued on January 16, 2018 – Record of Mediation

When parties reach agreement at mediation and the issues agreed to are reflected in the record, the record is fully binding upon the parties and has the effect of a final Board determination.  However, when no agreements are reached and the mediation is considered unresolved, the record itself has no res judicata effect.

In Karimova v. Nordyx, Me. W.C.B. No. 18-01 (App. Div. 2018), the Board granted a Petition for Award alleging a September 11, 2006 personal injury which had not been identified or included within a prior record of mediation.  The employer claimed that the injured worker was prevented by res judicata from raising the claim on the grounds that it could have been asserted at mediation.  The Appellate Division disagreed and ruled that the doctrine of res judicata applies only when a final judgment is rendered, but that unsuccessful or unresolved mediations which result in records that merely list the issues in dispute cannot be given res judicata effect.  Accordingly, the Division ruled that the employee was not prevented from pursuing her claim for the September 11, 2006 injury simply because it had not been raised at a previous mediation.

David Herzer will chair the Maine Professional Ethics Commission again for 2018

The Professional Ethics Commission is comprised of eight attorneys who meet monthly to volunteer their time and expertise to render formal and informal written advisory opinions to the Court, Board, Grievance Commission, Bar Counsel, and members of the Maine bar involving the interpretation and application of the Maine Rules of Professional Conduct applicable to lawyers.  Dave has been an active member of the Commission since 2010 and was the Chair for 2017.

WC Appellate Division Decision issued on December 29, 2017 – Challenge to Section 201(3) Rejected

In its final decision of 2017 an en banc panel of the Appellate Division consisting of seven ALJs unanimously denied an appeal brought by an employee in a case in which a claim of a gradual mental injury had been denied.  In Henderson v. Town of Winslow, Me. W.C.B. No. 17-46 (App. Div. 2017), the claimant had a pre-existing emotional condition resulting from an occupational event which was barred by the statute of limitations, but asserted a new gradual emotional injury related to interpersonal events at work. The ALJ denied the gradual stress injury claim on the grounds that the employee failed to meet the demanding burden of proof under Section 201(3).

Following the close of the evidence in the underlying litigation, the employee argued for the first time in her position paper that applying Section 201(3) would violate the equal protection clauses of both the United States and Maine Constitutions, and would also violate the Americans with Disabilities Act.  The argument was made in a brief portion of an otherwise lengthy position paper and was asserted without substantial legal analysis and supporting authority.  In denying the Petition for Award the ALJ did not comment upon the issues which were raised for the first time following the close of the evidence.

The employee filed a Motion for Findings of Fact, but in her proposed findings she did not raise either the constitutional or the ADA issues.  Similarly, when the employee appealed to the Appellate Division she did not cite these arguments as among the issues to be addressed on appeal.  Ultimately the employee argued before the Appellate Division that the ALJ committed reversible error in failing to address or act upon the alleged constitutional issues in the application of Section 201(3).

In denying the employee’s appeal the Appellate Division observed that long-established legal procedure prevents a party from raising issues for the first time on appeal, even though they may arguably be of constitutional significance.  In effect, the Division ruled that the employee had waived her arguments by failing to raise them in a timely fashion and by doing so only in a brief and insubstantial manner without focused and developed legal argumentation.

Therefore, we conclude that Ms. Henderson forfeited consideration of her equal protection and ADA arguments both by raising them belatedly, doing so in a perfunctory manner, as well as by failing to seek additional findings or conclusions regarding them.

Accordingly, the Division did not address the merits (or lack thereof) of the employee’s constitutional objections to Section 201(3).

The Division also rejected the employee’s argument that the burden of proof by clear and convincing evidence required by Section 201(3) should not be applied when a pre-existing condition is present.  The Division found that Section 201(3) applies equally to new stress injuries as well as to those which may be an aggravation or exacerbation of a prior condition.  Therefore, apart from any arguable constitutional issues, the Appellate Division upheld the clear and convincing evidence standard mandated by Section 201(3) for all types of gradual emotional injuries.

Steve Moriarty represented the employer in litigation before the Board and on appeal.

Law Court Decision issued on December 12, 2017 – Employment Status

In its second workers’ compensation opinion of the year, the Law Court has addressed determination of employment status in a unique factual context.  In Huff v. Regional Transportation Program, 2017 ME 229 (December 12, 2017), the petitioner volunteered as a driver for a non-profit agency which provided transportation services to disabled and low-income clients.  At the onset of the relationship the claimant signed a Memorandum of Understanding which expressly specified that volunteer drivers were not considered to be employees and that no employee-employer relationship was deemed to exist between the parties.  The petitioner received no income from Regional Transportation Program but was paid mileage reimbursement for the use of his personal vehicle at the rate of $.41 per mile.  According to the petitioner he was able to retain approximately one-half of the mileage reimbursement as income after paying for gas and vehicle maintenance services.

The petitioner was severely injured in an August 2012 motor vehicle accident and filed a Petition for Award.  By agreement of the parties the issue of employment status was tried separately, and the ALJ found that the petitioner was not an employee within the meaning of the Act.  The Appellate Division affirmed and the Law Court granted Mr. Huff’s Petition for Appellate Review.  On appeal the Court recognized that payment of income in exchange for services rendered is necessary to the existence of an employment relationship, and framed the controlling issue as follows:

Whether a mileage reimbursement to a “volunteer” can constitute remuneration when it is significant enough to exceed the volunteer’s immediate expenditures.

The petitioner argued that the rate of mileage reimbursement was sufficiently high to constitute the payment of income necessary to establish an employment relationship.

The Court rejected the petitioner’s argument and agreed with the Appellate Division that there was no payment of income even though the petitioner was able to operate his vehicle at a cost less than the mileage reimbursement rate.  The Court ruled that the statutory definition of “employee” clearly requires that a worker must receive remuneration in return for services in order to be entitled to compensation benefits under the Act, but that the mileage reimbursement does not qualify as income.  Therefore, because the petitioner was not an “employee” within the scope of the Act, the Court affirmed the denial of the Petition for Award.