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One of the most frequent questions from our clients is: “I am renting a car. Do I need to purchase additional coverage?” The answer is that it’s complicated and it depends.
When renting a car, more often than not, you will be asked to purchase insurance coverage through the rental car company. Types of coverages offered by rental car companies include:
Collision Damage Waivers or Loss Damage Waivers:
Covers damage to the vehicle or theft of the vehicle
Supplemental Liability Protection:
Covers damage to others
Personal Accident Protection:
Covers your medical costs in the event of an accident
Personal Effects Coverage:
Covers your belongings
It is important to ask yourself: What would happen if I got into an accident and the car was damaged?, what if a third party was impacted?, or what if the car is broken into or stolen? What would my out-of-pocket expense be in the event of a claim?
In some cases, coverage on your personal automobile policy will extend to a rental car, as long as it is considered to be a private passenger vehicle. However, some may find that it is simpler to purchase the rental car coverage directly from the rental company. If anything were to happen, it’s one-stop-shopping and the rental car company handles the claim. We have included some scenarios for where and when you may or may not want to consider purchasing additional coverage below:
When you may NOT need to consider purchasing additional coverage:
You are insured with a luxury insurance carrier and have automatic coverage. Luxury carriers include: Chubb, AIG, Cincinnati and PURE.
Your auto policy has the coverage.
You purchased a separate policy to cover your rental car exposure.
When to consider purchasing the coverage:
International Travel. It is often simpler to purchase local coverage. In some countries local coverage is even required by law.
You have auto accidents or violations on your motor vehicle record; you may want to purchase coverage simply to manage your auto insurance costs in the future.
You are renting the car for business purposes and your company does not provide indemnification or your personal auto policy excludes business use.
Someone other than yourself (an authorized driver on the rental contract) will be driving the car.
Your credit card company only offers secondary coverage or only covers your deductible.
You are renting something other than a private passenger automobile.
You don’t have your own insurance to protect you.
For short term car rentals within the U.S., you can generally rely on your auto insurance if you are with a luxury carrier. That being said, if you do so and there is an accident or damage for which you are responsible, the claim will be processed through your personal insurance policy. This will be added your automobile claim history which directly affects your auto insurance rates.
Bottom line: the most important item to understand is what coverage you may already have so that you do not feel pressured and can make an informed decision when picking up a rental car. The best way to make this determination is by calling your broker and/or reading your contract, before renting a car.