Navigating Rental Car Insurance

When renting a car for a family vacation, road trip or other personal use, the last thing you want to worry about is your insurance coverage. Regardless, before renting a car, you will have to decide whether to purchase additional rental insurance or not. In most cases, the coverage and deductibles you have on your personal automobile insurance policy apply to a rental car, provided it is being used for pleasure and not business.

However, if you do not have a comprehensive policy, physical damage or a loss to the rental vehicle may not be covered. In this instance, you may have to pay for a claim yourself, which could end up costing you thousands.

In the event of an accident, the only way to protect yourself from a major loss is with the right insurance policy. As such, it’s important to understand all of your insurance options when renting a car, which include the following:

1. Purchase a rental car endorsement through your insurance provider. Adding a rental car coverage endorsement to your current auto policy allows you to transfer your car insurance coverage from your own vehicle to a rental car. This can typically be done at a low cost, but you’ll want to have a solid understanding of what is and isn’t covered under your policy. Be certain to review with your provider in advance.
2. Purchase coverage through the rental car agency. Car rental agencies themselves provide coverage—coverage that often has added perks like roadside assistance. While purchasing protection through a rental car agency is convenient, there are a number of considerations to keep in mind. For one, insurance purchased through a rental car agency can be expensive. Second, insurance from rental car agencies often carries a number of restrictions and may not include protection from lawsuits and may not cover the cost of lost income to the rental agency while the rental is off the road for repairs caused by you.  This cost could be out-of-pocket and cost you thousands.   As such, if you purchase coverage from a rental agency, it’s important to know what you’re getting.
3. Use the coverage on your credit card. Many credit cards provide some form of rental car insurance, so long as you use the card to rent the car. In most cases, insurance of this kind provides basic protection for damage and theft. This type of coverage is typically only available if a person denies the insurance offered by the car rental company. Again limitations and exclusions may apply, so do your research before going this route. Notably, this coverage should not be used as a replacement for insurance, as protection is typically limited to only a few thousand dollars.

Properly structured, the best coverage, and most cost effective, for a rental car is through the rental car endorsement added to your own auto insurance policy.   

Depending on your insurance policy, you may need additional coverage in order to be fully protected. For instance, the type of vehicle you rent (e.g., moving vans, trailers, luxury cars and recreational vehicles) may have insufficient coverage under your policy.

These considerations can make the process of securing adequate coverage for your rental vehicle difficult. To ease the process, keep the following tips in mind the next time you plan to rent a car:

• Check with your insurance broker whether your existing policy extends to rental vehicles.
• Ensure the amount you’re covered for is equal to or greater than the value of the car you’re renting.
• Check that your insurance coverage is comprehensive and includes protection for third-party liability, collisions, theft and vandalism.
• Compare rental car insurance prices online. Keep an eye out for discounts and deals.
• Check with your insurance broker about how an accident in a rental car would affect your auto insurance rates if you make a rental car claim.

Above all, to save you time and the headache of navigating your options, it’s important to speak with a qualified insurance broker. Your broker can explain your different options and ensure that you are protected in the event of an accident. To learn more, contact Reith & Associates Insurance and Financial Services Limited today!