Insurance for Rental Cars Explained
With summer just around the corner, travel numbers are on the rise. A question our team receives frequently is whether or not to purchase the additional auto coverage on rental cars through the rental agency. If you’ve ever asked yourself this question, read on to learn about what you need to consider to ensure you’re properly protected.
Your Best Bet
The first (and best thing) you can possibly do for yourself is to know how to handle this situation before you arrive at the rental car counter. Our team at Robertson Ryan can help break it down so you fully understand what is covered by your personal auto insurance policy.
With most companies, the coverages and deductibles you have on your personal automobile insurance policy would apply to a rental car, providing it is used for pleasure and not business.
If you don’t have comprehensive and collision coverage on your own car, you won’t be covered if your rental car is stolen or if it is damaged in an accident.
What to Consider
We’ve included some main considerations and information you should know when making your decision on whether you will need the extra rental car insurance.
- Collision Damage Waiver (CDW), or Loss Damage Waiver (LDW), relieves you of financial responsibility if your rental car is damaged or stolen. If you have comprehensive and collision on your own car, you most likely don’t need to purchase CDW from the rental car agency.
- Some Credit Card companies include some collision and theft protection if the rental car is paid for with your card. This includes coverage for “loss of use,” which refers to the amount of money a rental car company can stand to lose while a car is being repaired, and can also include “diminution in value“, which refers to the reduction in a vehicle’s value that’s been involved in an accident. These are often overlooked and create “gaps” in coverage when renting vehicles that can leave you with significant out-of-pocket costs. If your credit card doesn’t offer coverage for loss of use, you may want to consider purchasing CDW from the rental agency.
- Liability insurance provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this doesn’t offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance.
- Renting Older Vehicles & Non-Passenger cars creates a different set of exposures that should be addresses accordingly. If you drive an older vehicle, but plan to rent a luxury vehicle, it’s important to make sure that your policy will cover the complete cost of the replacement value of the vehicle you are renting. If you are renting a vehicle that is not classified as a passenger car (e.g., a moving truck or 15-passenger van), your personal auto policy will not provide coverage and you must purchase a separate policy from the rental company to be covered in that vehicle.
Summary
If you plan to rent a vehicle frequently, it’s important to work with your agent to fully understand the protections you have in place. Charlie and his team at Robertson Ryan spends the time to make sure you can feel comfortable that you’re making the right decision to ensure you’re properly protected.
If you have any questions or concerns about your coverage going into an upcoming trip, please don’t hesitate to reach out to me at 480-886-6562 (cdjames@robertsonryan.com) for a comprehensive review or to get a quote. This will give you the peace of mind you need to sit back, relax, and recharge your batteries on your upcoming trip or vacation.
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