Cousin Matilda is in town. You offer to rent a car for her. The rental agent asks you to sign a line on the contract agreeing to take primary liability if the car is involved in an accident.
As an alternative, the agent offers an optional, $8-a-day supplemental insurance policy that will relieve you of that liability and cover up to $1 million in third-party claims.Should you buy it?
"People get to the counter and they start asking: `Will my insurance cover this? Will my insurance cover that?' " said Joe Russo, a spokesman for Hertz. "The truth is the rental agents can't know what your policy covers or doesn't cover."
Such on-the-spot debates are becoming more common, because rental companies have shifted primary liability to the customer in more than 30 states.
Rental giants like Hertz, Avis and National now make renters sign agreements making their own personal auto insurance the first ones at bat should the rented car injure someone or damage property.
Before the change, implemented in several states within the past year, the rental company was first in line to handle liability claims.
"The rental companies have woken up to stop getting beat with all these liability claims," said Michael Hudd, a Miami defense lawyer who represents insurance and rental companies.
But before you buy or reject the insurance supplement, examine how the shift might affect you.
First, avoid one confusion: The recent policy change has nothing to do with the collision-and-loss waivers that rental companies have offered for years.
Such waivers relieve customers of any responsibility for damage to rented cars. Many people decline the waiver if their own auto insurance policies include collision damage and cover rental cars - or if they carry credit cards that insure rental cars. But be careful: Credit-card coverage will pay for repairs to a rental car, nothing else.
The new policy on liability coverage, on the other hand, applies only if you injure someone or damage property. What companies have changed is the order in which coverage kicks in: Yours first, theirs second.
"They still have liability, but the new policy puts them sort of second in line," said Jim Baxter, president of the National Motorists Association, a consumer group in Dane, Wis.
If you don't own a car and therefore have no auto insurance, or if your auto policy doesn't cover you in a rented car, the change doesn't affect you.
If you don't have your own auto insurance, the rental company assumes primary responsibility, up to the state-mandated limits.
If you have insurance, however, and you cause property damage or bodily injury with a rented car, here's how the new policy works: The rental company waits for your insurance company to pay claims first, up to the limits in your policy.
That means there are claims against your personal policy, which could ultimately increase your premiums.
And if rental-car accidents increase the number of claims significantly, everyone's rates will go up, said Leslie Chapman-Henderson, a spokeswoman for Allstate Insurance.
"In the past, the car rental company said, `We will pay first, and if necessary, your company will come into play,' " said Steve Eckes, legal counsel for National Rent-a-Car. "It does rearrange, contractually, the relationship between the rental company and your insurance company."
But the shift in liability doesn't alter two key things, experts say:
Because the rental companies own the cars, they remain ultimately responsible. And they have deeper pockets, making them more likely defendants in personal-injury lawsuits.
"I don't think it's going to make a lot of difference in anything," said Brett Panter, a personal injury lawyer in Miami who once won a $7.7 million judgment against Alamo Rent A Car, which owned an auto in which four British sailors died. "The rental companies are most suited to pay damages."
You should still have liability coverage. Check if your own policy provides it, or buy the rental company's supplement.
The coverage should be enough to adequately protect your assets. Increasingly, rental companies are suing renters, said Rudd, the Miami lawyer.
Alamo or Hertz couldn't go after your house - that's protected by law - but you might have to give up other assets if you lose a case.
Panter advises clients to carry $300,000-per-accident liability insurance and an additional $1 million umbrella policy.
"It's always advisable to have more coverage," Panter said. "Bodily injury liability is not a legal responsibility, but it's a moral responsibility."