Are you Covered while Renting a Car?

Recently, we have received some questions like this…

Am I covered while driving a rental car?

Renting a car is one of life’s great conveniences. It’s an easy way to get around when you are somewhere unfamiliar. Closer to home it fills in the gaps if your own vehicle is out of commission. But are you covered while driving one? And better yet, should you purchase the rental company’s insurance coverage?

Here are a few things to consider:

1. Loss Damage Waivers

Many insurance companies do not provide a Loss Damage Waiver (LDW). That means that purchasing this additional coverage may be worth it if you plan on traveling. These waivers are essentially a “get-out-of-jail free” card. You are not liable for theft or damage to the vehicle. The standard fee typically ranges between 25 and 40 percent. You can expect an extra charge on top of the daily rental price.

2. Stand-Alone Rental Car Coverage

Did you reserve and pay for your rental car with a credit card? If so, there are rewards you can take advantage of. According to NerdWallet, all four major credit card companies – Visa, Mastercard, American Express and Discover – offer rental insurance benefits. These policies vary by company, so be sure to look into coverage details and limitations. In many cases,  these companies provide secondary coverage. This means that your primary insurance will pay before your secondary rental coverage kicks in to help. How much it helps depends on the limits stated in your credit card agreement.

3. Collision and Comprehensive Coverage

Typically, your personal auto insurance collision and comprehensive coverage extends to rental vehicles. However, it only extends if you purchased that coverage as part of your personal auto insurance package. First, collision insurance pays for damage to the rental car, regardless of fault. Second, comprehensive insurance protects against non-collision damage like theft, vandalism, fires, floods and hailstorms. These coverages have a deductible that must be satisfied before your insurance pays. Also, a typical deductible ranges from $250 to $1000.

4. Liability Coverage

Finally, let’s talk about liability coverage. This coverage from your auto insurance policy usually extends to rental vehicles. However, you should look into the liability coverage provided by personal auto insurance before purchasing anything more.

How do I know when I should purchase the extra coverage?

I recommend purchasing the extra coverage if you fit a few scenarios. First, you don’t want to rely on your own insurance policy. Second, you didn’t book a vehicle through a major credit card with rental car coverage benefits. Also, you should be weary about opting out of purchasing added coverage from the rental company. An important thing to consider is the claims process because accidents may still impact your primary auto insurance premium. If you’re taking advantage of credit card rental insurance benefits, you’ll have to consider the company’s claims process as well.

 

 

A big thanks to Mercury Insurance for the blog inspiration!