When Renting a Car Should I Buy Insurance from the Rental Agency?
Have you ever been standing at the car rental counter and not known how to respond when asked if you want to buy insurance for the vehicle you are renting? If so, here is a summary of what to consider when making that decision.
What coverage does my current automobile policy provide for a rental car?
Typically, your personal automobile insurance generally provides insurance coverage for a rental car with the same policy limits and deductible as your policy. Note that there are exclusions if you are renting a car for work purposes. So, if you are traveling for work, your own personal automobile insurance will not cover you if you are injured or the rental car if is damaged.
You need to review your automobile insurance policy and understand the coverages you have such as:
Comprehensive Coverage/Collision Coverage:
Comprehensive Coverage will pay for damage to the vehicle when it is damaged outside of a motor vehicle collision, such as by theft, vandalism, weather events (such as hail or a falling tree). Your deductible and coverage limits will apply.
Collision Coverage/Property Damage Coverage will pay to repair the rental vehicle if it is damaged regardless of who caused the damage to the vehicle up to your policy limit and your deductible and coverage limits will apply.
Liability Coverage:
Liability coverage pays for injuries and/or property damage that you accidentally cause to others. Such as rear-ending another vehicle or backing into a fence and damaging it. Your coverage limits will apply.
Personal Injury Protection (PIP) and Medical Payments (MedPay)
Depending on the state in which you purchased your automobile insurance these coverages might be a mandatory or an optional coverage. If optional, you must ask your insurer to add this coverage to your automobile insurance policy. PIP or MedPay coverage will pay medical bills for any injuries to you or your passengers which were caused by an automobile accident or injury while in the rental vehicle regardless of who was at fault for causing the injury. Medical bills are paid up to the policy limit and no deductible applies.
PIP will pay medical bills as you or your passengers get treated, will also pay a portion of, or all of any lost wages if physically unable to work, and essential services (such as lawn care, childcare, house cleaning) due to the automobile related injury.
MedPay only coverages medical bills for you or your passengers up to the policy limits.
2. How are you paying for the rental car?
Many credit cards offer additional coverage if used to pay for a rental car. You should review the terms of your credit card agreement and look to see if there is primary or secondary coverage through the credit card.
Primary coverage means that your credit card will be the first insurance to pay out a claim in the event of damage and you will not have to pay a deductible like you would have to with your automobile insurance.
Secondary coverage means that your credit card will only pay a claim in the amount that is not covered by your automobile insurance policy. They might also reimburse you for costs that your automobile insurance policy does not cover such as your deductible, towing fees, storage fees, and loss of use. This is the most common form of coverage through credit cards.
3. What do the insurance policies offered by the rental agency cover?
If you do not have your own automobile policy, coverage through the credit card you are using, or you don’t want your own insurance to pay in the event of an accident or injury here are the coverages that are typically offered by rental companies:
Collision Damage Waiver covers the rental car if it is damaged or stolen while you are renting it.
Supplemental Liability Insurance coverage provides coverage to others if you cause injury or property damage to someone else while using the rental car. These are sold in different policy limit amounts depending on the laws of the state in which you are renting the vehicle.
Personal Accident Insurance pays for you and your passengers’ medical bills if you are hurt in an accident while using the rental car. It typically covers ambulance bills, medical expenses, accidental death and dismemberment.
Personal Effects Coverage covers your personal belongings if they are stolen or damaged in the rental vehicle such as luggage, phones, and laptops. Some items are often excluded from these policies such as: pets (or other animals), bicycles, eyeglasses/sunglasses, and cash.
4. Are there any other things that should be considered?
Other Charges that you Could End up Paying out of Pocket:
Roadside Assistance – if you do not have coverage through your own automobile policy or a third-party such as AAA.
Diminished Value – many insurance companies have exclusions for diminished value which is the damage to the value of a vehicle from physical damage to the vehicle that remains even after the vehicle has been repaired.
Loss of use damages that stem from the rental car agency not having the rental car available to rent to other customers while it is damaged and being repaired. Often property damage insurance will cover this damage, but you want to read your policy for any exclusions.
Towing – if the rental car is not drivable after a collision that you caused you will be responsible for the towing fee. Your own policy may have a separate coverage section for this coverage, or it may be included within your property damage coverage. You need to read your policy to determine the coverage for this.
Other drivers of the rental car and who will be passengers? Are any non-relatives going to be driving the rental car? Do all of the passengers of the rental car have health insurance that would cover their medical expenses if they were injured in car collision?
Do you have insurance that could cover a loss such as health insurance, homeowners or umbrella insurance coverage?
Health insurance may provide you with coverage for medical expenses caused by injury in car collision that exceed the PIP or MedPay policies or would pay if you did not have PIP or MedPay coverage.
Homeowners or rental insurance may provide coverage to your property that is stolen or damaged while using a rental car.
Umbrella insurance would provide additional coverage to any persons or property you injure or damage while using the rental car.
5. Read the Insurance Contract
You should be cautious about asking the rental agent about the coverages available through the rental car agency. Rental car employees are not likely to be fully trained to give you advice regarding what coverages are available and the exclusions. Further they will be uninformed as to what insurance coverage you already have. The written contract of insurance controls what will and will not be covered so always read the insurance contract to know exactly what is and is not covered.
Hopefully, this article helps you think about the coverage you need when renting a car so that you are prepared for your next rental.