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What happens if a rental car is in an accident while being driven by someone that is not insured, but on the rental contract?If the driver is not an authorized on the rental contract… The rental car contract, and insurance coverages provided by that contract are generally VOIDED.What then, are the consequences of a voided rental contract? Benefits that are normally extended or even purchased with the rental car contract can be terminated. It also creates the potential for the unauthorized driver’s insurance policy to deny physical damage coverage for the rented vehicle.Rental Car Contract:The rental car contract is between that person(s) signing the contract and the rental car company. It should come as no surprise, that the contract may be breached if the contract signer allows use of the rental vehicle, counter to the contract provisions. An “authorized” or “unauthorized” driver are terms that are liberally used in any rental car agreement.As an example, the Avis Rental Car Contract shown below, is clear that an unauthorized driver terminates the contract.If so, what are the consequences?:According to the Avis contract, the consequences include:Voiding of all Liability ProtectionVoiding of all Optional Services includingAdditional Liability Insurance, Personal Accident Insurance, Personal Effect Protection.Makes the Signer liable for all Penalties, Fines, Forfeitures, Liens etc, etc.This type of contractual intent or clause is not unique to Avis.The Hertz contract can be seen here.The Budget contract can be seen here.The Alamo contract can be seen here.If another driver has insurance, one should not assume that their insurance will extend to the rental car that you are renting. The sample ISO Personal Auto policy extends to rental cars specifically if the vehicle in question is a “non-owned auto” of the insured. Sample ISO Auto policy exclusion language can be seen below:If the driver is otherwise insured and the rental vehicle is being used without contractual entitlement, there may be conflicts regarding which policy (if any) is going to respond.How the company will respond in this instance will depend on the state which the accident occurred, the state in which personal auto policy was written, the insurance company, and their specific contract wording.When renting a car, it is always in the renters best interest to make sure that all drivers are “authorized” by the rental car company and also otherwise insured.

What are the consequences of a rental car that is in an accident while driven by someone that is insured, but not an authorized driver on the rental contract?… The rental car contract, and insurance coverages provided by that contract are generally VOIDED.What then, are the consequences of a voided rental contract? Benefits that are normally extended or even purchased with the rental car contract can be terminated. It also creates the potential for the unauthorized driver’s insurance policy to deny physical damage coverage for the rented vehicle.Rental Car Contract:The rental car contract is between that person(s) signing the contract and the rental car company. It should come as no surprise, that the contract may be breached if the contract signer allows use of the rental vehicle, counter to the contract provisions. An “authorized” or “unauthorized” driver are terms that are liberally used in any rental car agreement.As an example, the Avis Rental Car Contract shown below, is clear that an unauthorized driver terminates the contract.If so, what are the consequences?:According to the Avis contract, the consequences include:Voiding of all Liability ProtectionVoiding of all Optional Services includingAdditional Liability Insurance, Personal Accident Insurance, Personal Effect Protection.Makes the Signer liable for all Penalties, Fines, Forfeitures, Liens etc, etc.This type of contractual intent or clause is not unique to Avis.The Hertz contract can be seen here.The Budget contract can be seen here.The Alamo contract can be seen here.If another driver has insurance, one should not assume that their insurance will extend to the rental car that you are renting. The sample ISO Personal Auto policy extends to rental cars specifically if the vehicle in question is a “non-owned auto” of the insured. Sample ISO Auto policy exclusion language can be seen below:If the driver is otherwise insured and the rental vehicle is being used without contractual entitlement, there may be conflicts regarding which policy (if any) is going to respond.How the company will respond in this instance will depend on the state which the accident occurred, the state in which personal auto policy was written, the insurance company, and their specific contract wording.When renting a car, it is always in the renters best interest to make sure that all drivers are “authorized” by the rental car company and also otherwise insured.Thanks for the A2A.

Short answer: It is not illegal for a licensed and insured teen to drive a rental car in the circumstances that you describe.BUT! The question and details posed, involve other factors that have significant consequences. It’s important to understand the ramifications.ILLEGAL?:To be illegal, the act would have to be something that is a violation of statute, regulation or ordinance. Driving a car makes one subject to the Motor and Vehicle laws in that state.Regarding the scope of this question, the jurisdiction’s Motor and Vehicle laws are going to be primarily concerned with issues like:Proper Licensure of the DriverProper Insurance on the VehicleProper Registration/Ownership of the VehicleIn this case the contractual relationship of the rental car. If the parents in are the car or immediately available to confirm ownership, this should not constitute an illegality with motor vehicle regulations.CONTRACTUAL CONSEQUENCES:“I know teens cannot rent a car, but if a parent does, and the teenager is fully insured under their personal insurance, what is the consequence if they are allow to drive a car rented by a parent?”Rental Car Contract:The rental car contract is between that person(s) signing the contract and the rental car company. It should come as no surprise, that the contract may be breached if the contract signer allows use of the rental vehicle, counter to the contract provisions.An “authorized” or “unauthorized” driver are terms that are liberally used in any rental car contract, regardless of the driver’s age.As an example, the Avis Rental Car Contract is clear that an unauthorized driver terminates the contract. (Note: Some rental car contracts allow the addition of a drivers to the age of 18 to be added as an authorized driver. Hint… wise choice.)Any unauthorized driver operating a rental car simply terminates the rental car company’s contract. What then are the consequences?:According to the Avis contract, the consequences include:Voiding of all Liability ProtectionVoiding of all Optional Services includingAdditional Liability Insurance, Personal Accident Insurance, Personal Effect Protection.Makes the Signer liable for all Penalties, Fines, Forfeitures, Liens etc, etc.This type of contractual intent or clause is not unique to Avis.The Hertz contract can be seen here.The Budget contract can be seen here.The Alamo contract can be seen here.It’s important to note that because Motor Vehicle and Traffic laws are unique by state, rental car contracts include wording that is specific to some states in order to comply with their laws and statutes.Summary: The general consequences of an “unauthorized” driver of a rental car appears to nullify the contract and any provided insurance coverage is voided.Auto Insurance Contract:Similar to a Rental Car agreement, your Auto Insurance Policy is a contract. It is a contract between you (the insured) and your auto insurance company. Auto insurance contractual wording varies by state and in some states can vary by insurance carrier.In the event of an accident with a rental car, things get tricky. In nearly any case, coverage is going to be determined by three things:Is the Driver an Insured? Whether the driver and rental contract signer is considered a “You” or “Insured” in the auto policy.Is the Vehicle Covered? Terms like “Your Covered Auto” and “Non-Owned Auto” are defined, covered and excluded in auto insurance contracts.What Coverage Part Responds? Coverage Parts that can come into play in the event of an accident include:Liability - coverage for injuries which the insured is liable to a third party.Typically, Liability coverage considers an “insured” to include “family members”. For an insured or family member, the vehicle driven is generally not a contractual issue or exclusion.Uninsured Motorist - coverage for injuries of the driver and passengers if the other driver was at fault and did not carry (or carry adequate) auto liability insurance.An "insured" for this coverage part generally includes "family members" similar to Liability coverage. For an insured or family member, the vehicle driven is generally not a contractual issue.Physical Damage Coverage - coverage for damage to a covered auto for Collision and Comprehensive losses.This coverage part is going to focus in part on whether the vehicle is a covered auto. Auto policies anticipate the fact that an “insured” may use vehicles other than those listed. In doing so, they specifically define a “non-owned auto". The intent is to restrict coverage under the Physical Damage Coverage part to specifically defined vehicles.In defining where coverage may be extended or excluded to rental cars, auto insurance policies may reference a “non-owned auto”. In some cases, the coverage from the auto insurance policy will tie exclusions to a “non-owned vehicle” and the rental agreement. For example:​The sample ISO Auto Policy reveals exclusions that can come into play with an “unauthorized” driver of rental car, even if that driver is insured for certain coverage parts under the auto insurance contract. Specifically this can be an issue under the auto policy’s Physical Damage coverage part(s).Important: Insurance coverage and rental contracts vary by state, insurance company and rental car company. This issue can be very complicated especially since every scenario is unique. Cases involving unauthorized drivers bring potential significant consequences. Why take chances?Bottom line: The legality of this scenario may not be an issue. However, the contractual consequences can be significant.Best practice: Make sure that all drivers are authorized on the rental car agreement and check with your insurance company representative on the application of proper insurance coverage.Thanks for the A2A.