Should I buy the auto insurance when renting a vehicle?
Vacation time. (YAY!!!) Time to go to the car rental desk (Booooo!) And decision time… Would you like to purchase the auto insurance coverage from the rental agency?
Auto Insurance Liability
Your auto coverage follows you, not just your vehicle. So, in most cases your auto liability coverage will apply to a rented vehicle. Keep in mind, this applies for personal use, not business.
On the other hand, people who don’t have car insurance will need to purchase coverage from the rental company. If that’s the case, you are probably only provided with state minimum coverage. This can leave you exposed even if you have a minor accident. You should always ask if higher limits or ‘excess liability’ coverage is available.
Physical Damage Insurance
If you are renting a private passenger vehicle, then physical damage coverage will apply to a rental vehicle subject to your deductibles. This means if you have $500 deductibles on your car, it will most likely work the same way on a rental vehicle. If you don’t have physical damage coverage on your vehicles, then it would not apply to a rented vehicle either. Simple enough.
Again, in that case you will have to purchase physical damage coverage from the rental agency (aka Loss-damage waiver). This covers damage to the vehicle itself during the rental term.
The Fine Print
Even if you have physical damage coverage, you may want to pony up a few bucks to buy it from the rental agency anyway. The are some things that your policy probably doesn’t provide such as:
- Loss of Use – the rental company can charge you the rental fee for a vehicle while its being repaired. And guess what? Your insurance carrier won’t pay for that loss of use.
- Depreciation – some rental companies will depreciate the value of a vehicle after a loss. They then charge that depreciated value to you (Cha-Ching!). This can be thousands of dollars. Your personal auto insurance will not pay for the depreciation.
- Administrative Fees – a rental company may assess administrative or other fees that your policy will not cover. Read the fine print!
- Commercial Vehicles – a personal auto policy is intended for personal autos, not commercial vehicles. The most common example is a moving truck. Your personal auto may have GVW restrictions you need to be aware of.
- International Travel – your auto policy probably doesn’t cover anything outside of the States and Canada. Your umbrella might though.
Some credit card companies automatically provide rental car insurance as well. You may want to investigate that option before buying to the rental company’s plan.
What we typically tell our clients is this:
If you’re renting a vehicle infrequently, then buy the deductible waiver from the rental agency. Yes your coverage will apply, but the rental agency can still make your life miserable with The Fine Print.
If you rent vehicles frequently, then buying the deductible waiver will get really expensive. You probably want to roll the dice and use your insurance.
Really you have to know what coverage you already have to make an informed decision. The best way to do so is to talk to your agent or broker . Find out what makes the most sense for you. Bon Voyage!