A Toronto man recently discovered a nasty — and unfortunately increasingly common — surprise: the van that had just been in his driveway was missing. The 2022 Ram 1500 Hybrid would be high on a thief’s wish list; the global desire for premium North American trucks and SUVs has never been greater. But the headline wasn’t about escalating theft, a topic that dominated the news (at Driving.ca, we’ve done a whole podcast on the subject last week) for a few years now. It was about the fact that the stolen truck had not been properly insured; he had rented it from a big car rental company.
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When renting the vehicle, the driver assumed that his current auto insurance would extend to the one rented. He was partly right in that the coverage he had was extended to a vehicle he rented. What he didn’t consider was that he wasn’t sufficiently insured and that what worked for his previous vehicle wasn’t going to cover him on the fancy rental platform. Now the rental agency informs him that he owes them 50,000 to return them whole.
This is not a stackable piece. It’s a reminder that insurance is a complicated transaction that we take for granted when we shouldn’t. It’s a bit like driving. It’s fine until it’s not, and when it’s not, the results can be frustrating at best and disastrous at worst.
Although insurance is mandatory, it is overseen by provincial governments and regulated by entities such as the Financial Services Commission of Ontario. Within these rules, these wordings and requirements are optional coverages. Decisions you make in one area can have unintended consequences in another, as this tenant discovered. While he had the compulsory liability insurance on his personal policy, he withdrew from part of the PAO 1 who says “you can purchase coverage to protect against loss or damage to your automobile caused by collision, fire, theft and a variety of other unpredictable perils. Emphasis on “can“.
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It’s not uncommon to remove this coverage with an older car that often wouldn’t be worth repairing. People do it to save money all the time. But when it comes to renting something else, that means taking out the extra cover offered by rental companies. We rent cars for holidays; we rent them to move; we rent them when our personal vehicles are at the store. “Renting a vehicle to move personal items is automatically covered by OAP1 but follows your policy coverage. If you are solely at fault, physical damage is not covered (collision and compensation),” says Debbie Arnold , broker at Sound Insurance A good broker will advise you to take out additional coverage, such as OPCF 27 that extends coverage to a rented or borrowed vehicle. That’s a few dollars more for a whole lot of peace of mind.
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The fine print is always a rabbit hole, but if you’re renting a vehicle, you should delve into at least three of them: your own insurance policy, the insurance offered on the rental agreement (check their sites Web) and the section of your credit card that may relate to rentals. Many costly mistakes are made. The $4,000 hail damage not paid because credit card coverage did not apply to vans; damages of nearly $19,000 billed to a customer who rented a Home Depot van and discovered after encountering a deer that Home Depot does not insure their vehicles – you are responsible for anything through your personal insurance. Incidentally, this deer strike would fall under the optional full coverage, so you can see how quickly someone could get into trouble.
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We are heading into rental car season for many. With very few exceptions, “Canadian auto insurance only covers North America. If you are renting a vehicle in Mexico or any other country, you must purchase the insurance offered by the rental company. If you are driving in Mexico, you must purchase insurance for your vehicle at the border! Your Canadian policy will not cover you there,” says Arnold. Pay close attention to who is legally allowed to drive your rental and list everyone who might be. There is also a weight limit on your personal policy of 4,500 kg on rental vehicles. If you go in many motorhomes, you must take out their insurance.
All-inclusive pricing advertising means Ontario car buyers have a right to know the bottom line. Photo by Getty
If you take advantage of credit card coverage, remember that you must book and pay for the rental with that same card, and credit cards often exclude certain vehicles like vans and UHauls. They also have time limits and most will not insure a lease with an MSRP of $85,000 or more – as prices go up, that’s not as much of a vehicle as it used to be.
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Arnold notes that the turmoil in the auto industry over the past three years has changed the recommendations it makes to its customers. “Theft is a huge problem now and due to a lack of inventory, when people go to buy a replacement vehicle, they may have to wait months.” Most insurance replacement vehicles are valid for 30 days, which means either additional expenses or requests from friends or family.
Added to the turmoil are the exorbitant prices of vehicles. “Even with the loss of a new vehicle, whether by theft or total loss due to collision, if the customer has OPCF 43 – Limited Waiver of Depreciation – which pays according to the original bill of sale, the replacement can cost thousands of dollars more.There is no coverage for this under the auto policy.Arnold recommends purchasing a product from Optimum it is, or you can ask your dealer for gap insurance. This OPCF 43 was like a get out of jail card if you had a new car; no more.
If a rental vehicle is on your radar for some reason, call your broker and ask how to protect yourself from bullets in the event of anything.
