If you have ever been on vacation and rented a car, you have probably been asked if you wanted to purchase insurance from the rental car company. Did you? Should you? What are your options? Let’s take a look at the coverage options for rental cars and what’s the best fit for your situation.
Most automobile insurance policies will provide liability coverage for you, the insured, regardless of what vehicle you are driving. This includes rental cars. Therefore, you are typically covered for any damages you might cause while driving the vehicle. However, what if you damage the vehicle that you rented? Your policy also offers coverage for a vehicle that is not available for your regular use, such as, a rental car. However, your other vehicles must have physical damage coverage (comprehensive and collision) for the coverage on your policy to apply and you will still owe your deductible. All policies are different so check with your agent on the details of your policy.
So the question becomes “If I’m covered under my auto insurance, do I need to buy insurance from the rental car company?” You don’t need to but you might want to. Your insurance coverage will likely cover you if you are involved in an accident while driving a rental car. However, if you submit a claim on your insurance, your premium may increase due to the loss of discounts and loss surcharges that insurance companies regularly use.
If you are responsible for an accident while driving a rental car, there are additional charges that the rental company may charge you. Loss of Use and Diminution of Value (Reduction in Market Value) are two of the more common charges. Some policies will cover these types of charges, some will need an endorsement and others will not cover these types of damages. Contact your agent for specifics on your policy before you rent a car.
Another important aspect to keep in mind is that everything I’ve mentioned so far only comes into play if you are renting the vehicle for recreational not commercial purposes. If you rent the vehicle on a business trip, you’ll need to look to your employer and/or their insurance for coverage for the rental vehicle.
Yet another piece of the puzzle is whether you are renting a vehicle in the US/Canada or another country. Most personal insurance policies only provide coverage in the US, its territories and Canada. If you are traveling, you’ll need to look to the rental car company or another source (such as your credit card company believe it or not!) for coverage. Some carriers will provide worldwide coverage on an umbrella. Ask your agent if you have any coverage that would apply overseas.
If you have questions on how best to insure your car, a rental car or any other car, contact the Frederick Agency today at 419-732-3171.