This time of year, we often get phone calls asking if clients should purchase car rental insurance or if their insurance already covers the rental. Here is the advice we give them.
On the car rental, you only have coverage that extends to your rental car from your current personal auto policy if you have a vehicle (or more) that has Comprehensive and Collision Coverage. Even with this coverage, there are a couple of important points to remember.
- Your Personal Auto Policy limits where coverage is extended. For example, the policy generally only covers you in the USA and its territories. You will not be covered in Mexico, and you will usually need to have an endorsement to be covered in Canada.
*You will also want to add any person that will drive the rental as a driver. Understand that when they are driving their insurance now becomes Primary in the event of an accident. So, be very careful who you let drive this rental car!
- In the event of an accident in a rental car, rental car companies will add three expenses, in addition to repairs. These expenses are never covered or extended from your personal auto policy unless a specific endorsement has been added, but most insurance companies DO NOT offer this endorsement.
- Diminished Value Cost Because the vehicle has been wrecked, it is now worth less when they attempt to sell it. This amount can be high!
- Loss of Use For the time it is being repaired and can’t be used.
- Administrative Costs Charged to process the claim. Rental car companies offer policies that cover you completely in the case of a claim. If anything happens to the vehicle, you can walk away with no out-of-pocket expense. Some companies even offer lower cost options that may have a deductible, which would be the only out-of-pocket expense in case of a claim. Unfortunately, the repairs on rental cars can be expensive. One of our clients pulled a rental car into a stall and got too close to the curb and it popped a couple of the clips holding the bumper. The rental car company is charging him $700 for the repair!
- Another issue we often see is that your policy is a personal auto policy. So, if you are renting a commercial vehicle, it may not be covered. This includes renting a moving truck, moving van, or a vehicle for any commercial or business use. If you are using the rental car for business or company use, there may be no coverage! We had a client that went back East and totaled his rental car. The insurance company found out that he was traveling for work related reasons, not vacation, and he was denied coverage.
Check with your agent to see your specific coverage. These are guidelines for informational purposes only. We always say:
“When in doubt, take the coverage!”
Safe Travels and feel free to email or call us with any questions you may have.