Summer is the time for family vacations and that means rental cars. There are many frequently asked questions about what will be covered while renting a car. Hopefully this will clear up some of the confusion about car rental coverage.
Q: I am going on vacation and plan on renting a car. Will my personal auto policy cover the rental vehicle?
A: A majority of auto insurance companies will extend coverage from your personal auto policy to a rental vehicle. Most policies coverages pay for actual repairs to the rental car, however, you are still responsible for your policy deductible. The rental agreement may also make you responsible for additional items. If your personal auto policy does not include comprehensive or collision, the rental car will not be covered if it is stolen or damaged. Additionally, if you are renting a car outside of the United States, coverage may not be extended.
Q: I heard that if I use my credit card to pay for the rental vehicle, the vehicle will be covered.
A: Many, but not all, credit card companies offer rental insurance. They pay for damage to a rental car if you pay with that card but the coverage will be secondary to your personal auto policy. Basically, if your credit card company offers rental insurance, they may pick up whatever your personal auto insurer does not, such as your deductible.
Q: If my personal auto policy covers my rental car and my credit card covers my deductible, does this mean I’m fully covered?
A: While your personal auto policy and credit card company provide adequate coverage, the often fall short. Neither covers towing costs, diminished value, or administrative fees. All these fees may be tacked on by the rental company in case of an accident and all of which you will be liable for. The renter is always responsible for any loss or damage done to a rental vehicle, not matter whose fault it is.
Q: Would it be wise to purchase the extra “insurance” offered by the rental company?
A: A CDW (collision damage waiver) purchased from a rental car company fundamentally takes the place of your own comprehensive and collision insurance. This lets you and your insurance company off the hook if you get into an accident or is the rental is stolen or vandalized. In exchange for purchasing the CDW, the rental company will waive claims against you for damages if an accident occurs. However, the CDW coverage will become void if the accident was caused by speeding, driving under the influence, or a reckless act or error.
Q: Should I purchase the CDW offered by the rental agency?
A: Make sure to go over your insurance options before renting. Contact your independent insurance agent and find out if you have enough coverage under your existing policy. Also, contact your credit card company to find out if it offers rental car coverage and find out the restrictions and limitations. If both coverages do not seem to be adequate for your needs, you may want to consider purchasing the CDW coverage.
Q: How do I know what I should do?
A: The option is yours and yours alone under the law. Your independent agent can help explain these options and provide you with information so that you can make the best decision for you.