There’s nothing better than jetting around on vacation in a fancy rental car. It’s exciting to indulge in that red convertible or family van with all the bells and whistles. But before you enjoy this perk of vacationing, make sure that you know what your existing automobile insurance policy covers and what it does not.
You could be suckered into buying an expensive and unnecessary policy from the car rental agency or WORSE… your dream vacation could turn into a nightmare if an accident happens and you find out that your coverage isn’t sufficient.
WHAT YOU NEED TO KNOW…
1. Check Your Auto Policy Coverage. In order for you to have comprehensive and collision coverage for the car you rent for personal use, you must have that coverage on one vehicle on your auto policy. Don’t expect to have coverage on a rental that you don’t purchase on your own vehicles. While you may decide to have a less expensive policy on your own car, take care that you think about how that policy may apply to the fun vacation car you are driving.
In good news, if you are using a rental in place of your regular vehicle, many full-coverage auto policies will transfer to rental vehicles. Liability coverage is almost always extended automatically from your auto policy. Just check the fine-print to make sure.
2. Check for Exclusions. While your policy may offer the full-coverage you need, take care to check for exclusions. Is there only coverage if a named insured rents a car, rather than another household member, such as a child? If someone else, perhaps a child or spouse, is continuing to drive your car at home, does it negate the rental-car coverage because your regular vehicle is still being driven? “Loss of Use” may be charged to you by the rental car company in case an accident puts the rental car out of commission for repairs. There is no coverage for this. The rental car company may also charge you for diminished value if their property can no longer be rented for the same fee as a result of damage. There is no coverage for this. And if you allow someone else to drive the rental car…perhaps a valet gets in an accident while parking the vehicle…there is usually no liability or Comp/Collision coverage for those claims either.
3. Check How Damages are Paid. Some insurers reimburse, rather than paying for the claim upfront. This could put you in the position of waiting for a large reimbursement. Even if the reimbursement ends up being a small amount, just barely above your deductible, making a claim could also impact your future premiums, especially if you are already a high risk driver or have made previous claims.
WHAT YOU NEED TO KNOW ABOUT SUPPLEMENTAL INSURANCE…
1. Credit Card Coverage. Paying with a major credit card may also offer you some coverage. Before you step up to the rental counter, it’s a good idea to know what your card offers. Do you have to charge the entire purchase to the card in order to be covered? Is extra coverage still offered through your credit card if you purchase insurance through the rental car company? What is excluded from the coverage (taxes, fees, etc…)? Are certain types of vehicles excluded? Do you have to make a claim from your insurance before they will cover anything? Knowing the answers to these questions will help you determine whether credit card coverage will work for the rental you are selecting.
2. Rental Company Coverage. Purchasing additional coverage from the rental car company is also an option. There are generally four insurance offerings from rental companies. The first is the Loss-Damage Waiver which costs $9-$19 per day and often waives financial responsibility if a rental car is stolen or damaged, as well as covering ancillary fees such as towing and “loss of use.” The second is Liability Coverage, around $7-$14 per day, which is required by states and protects you from potential lawsuits. Third is Personal Accident Insurance, a policy to cover medical costs after an accident, costing $1-$5 per day. The fourth is Personal Effects Coverage which insures your property within the rental car for $1-$4 per day. These extra charges can be helpful if you are otherwise uninsured but they often duplicate coverage if you’re already properly insured, meaning you are paying for coverage you have already purchased through your personal policies.
This is a GREAT deal for the rental car company but NOT a good one for you!
Being armed with all of the information you need when you step up to that rental counter will give you peace of mind so you can take that rental vehicle and ENJOY your vacation, knowing that you’re covered.
If you need help going through your policies with your trip in mind, give your agent a call!