“Do you want to purchase rental car insurance for the vehicle?” asks the representative at the rental car agency. And thoughts run through your head like, “I don’t know. Is this something I need? Will my auto insurance cover the liability? It’s expensive if I don’t need it. On the other hand, I don’t want to not have coverage.”
Five Tips to Clear Up Rental Coverage Confusion
At Healy Group, we are here to help. And while every situation is not the same, here are some general tips that will help you make an informed decision next time you rent a car.
1. Know your personal auto policy.
Because insurance policies vary, it’s a good idea to give your insurance agent a call before you rent the car to make sure you have the coverage you need. In many instances, your personal auto policy will provide coverage for a rental car—but, that coverage may be limited to the value of the car you own, rather than the car you are renting. Of course, if you don’t have a personal auto policy, you’ll need to purchase coverage from the rental company. Keep in mind that in the event of an accident, many rental car companies will charge fees beyond repair costs. They may assess a loss-of-use fee for each day the car is unusable, as well as charge you because the value of the car has decreased. Not all insurance policies cover these fees.
2. Know your homeowners or renters policy.
If you’re traveling with expensive electronics or other valuable items, you probably want to consider what coverage you’ll have in the event they are stolen. Your personal auto policy and or credit card coverage likely won’t provide protection for this scenario.
3. Check your credit card protection.
Most credit cards will also provide some coverage, but often payment is limited to reimbursement of your personal auto policy deductible (after the policy pays for repairs). Generally, loss-of-use and other fees are not covered, but it’s important to check with your credit card provider to determine their policies. And while some cards may offer additional protection for a fee, usually coverage is limited to damage to the car, not liability for any injuries to others. Remember, to receive any sort of benefits from your credit card, you must use that card to pay for your entire car rental.
4. Consider any unique circumstances.
Are you renting a car in a foreign country or for longer than a week? You’ll definitely want to get confirmation of coverage from both your insurance carrier and your credit card company because different rules apply. Also, no matter where you travel, vehicles such as trucks, RVs and exotic sports cars often aren’t covered under standard agreements. And if you’re using a car for business purposes, your personal coverage may not apply. Finally, if multiple people will be driving the car during the trip, make sure your coverage will apply to all the drivers.
5. Learn about the insurance offered by the rental car company.
According to the Insurance Information Institute, rental companies offer four main types of insurance coverage:
- A Loss Damage Waiver relieves you of responsibility if your rental car is damaged or stolen. This may also provide coverage from loss of use.
- Liability Protection provides protection from lawsuits if you are sued after an accident.
- Personal Accident Insurance covers you and passengers for medical bills after an accident. You may not need this if you have adequate health and auto coverage.
- Personal Effects Coverage protects you if items are stolen from your car. You generally are covered for this under your homeowners or renters policy, but keep in mind that the loss must exceed your deductible for you to receive payment. If you have a high deductible, it may make sense to purchase this from the rental company.
Taking Time to Do your Research is Worth the Earned Peace of Mind
When you go on vacation, you want to stress less and enjoy more. So give Healy Group a call before you leave. Then, when you are standing at the rental car counter, you can stop wondering about your coverage and start enjoying your trip!
To find out if your auto or homeowners policy extends protection to rental cars, contact us. We look forward to your call.
About the Authors
Connie Greenwood has 35 years of experience as an Insurance Advisor. She enjoys helping her clients and prospects understand their insurance options, and crafting insurance solutions tailored to their unique needs. Connie finds great joy in being a trusted advisor for her clients. She loves helping protect their financial welfare against unforeseen accidents and circumstances and bringing them peace of mind.
Tim Pingel has almost 20 years of experience as a personal insurance adviser. He provides individuals, couples, and families with home, auto, and umbrella insurance. His ultimate goal is to be his clients’ trusted adviser and expert, so they have the peace of mind and protection they deserve.