A common question presented to our staff is….”does my auto policy cover me while renting a car?” The answer to that is yes, and no.
The coverage that you carry on your own auto policy usually does extend to a rental car. The same liability limits apply, and if you carry full coverage on at least one vehicle, that coverage and your deductibles will apply to the rental as well. If you do not have a vehicle with full coverage, you would not have that protection on the rental vehicle.
Here is where things can get sticky.
Many rental car company contracts have language in them that holds you to more responsibility than what a personal auto policy will actually cover. Here are a few:
“Replacement cost requirements” Auto insurance policies cover your vehicle for actual cash value which is basically “book value”. So naturally if your vehicle is several years old, with 40,000 miles on it the actual cash value is much less than what the original cost new. There have been some rental car contracts that made you responsible for not only the cost new, but the cost new of the newest model available. This is an obvious gap in coverage.
“Loss of Use” If you damage a rental car it may be out of service for a period while undergoing repairs. The rental company could lose income while that vehicle is unavailable. Most insurers will pay for loss of use as long as the rental company has no other vehicles available for rent. If they have other vehicles sitting there idle, they are not actually losing any income therefore insurance would not respond. It is advisable to ask under what circumstances you would owe for loss of use.
“Diminution of value” This is the perceived loss of value of a vehicle after an accident even after being fully repaired. Most rental car companies will estimate the amount of these losses and charge you for them. Some auto insurance companies will pay these losses, some will not. For this situation, consult your agent or insurance company.
So I should buy the rental car company’s insurance, right? While you certainly can please note that this “insurance” that they offer is not insurance at all. It is not regulated by any department insurance, and is merely a revised (friendlier) contract….with many, many triggers that void the insurance or exclude coverage. Triggers could be driving on an unpaved road, taking an antihistamine, and many others.
I am not suggesting that this is how as all rental car companies do business….most do not. Just be aware that many do.
So what to do? The best thing is to check with your car insurance carrier to see how they handle each of these issues, then when booking your rental reservation ask them how their contract responds to these as well. If you don’t like what they tell you, or they don’t know, ask for a copy…or move on to the next one. As long as you are armed with this information you should be able to find one you are comfortable with, so you can have a worry free vacation.
Joe Beck, CIC / VP
Beck Insurance Agency, Inc.