Does My Auto Insurance Cover My Rental Car While On Vacation?

Posted in Auto Insurance

You’re standing at the rental car counter ready to start your much needed vacation with friends or family. Then the sales agent hands you a clipboard with an intimidating rental car contract. Suddenly, you’re stressed about the possibility of needing the extra insurance although your auto insurance may cover your rental car. How do you know if your rental is covered with your existing auto insurance plan?

For domestic travel when renting a car, the answer is: it depends. It varies based on your current auto plan and carrier. The first step is to check your auto insurance policy and see what type of coverage for rental cars may already be included in your personal auto insurance. If you carry comprehensive and liability coverage on your personal vehicle, coverage typically will extend to your rental car.

However, if you are renting a car that is not of similar value to your personal car such as a convertible sports car and you have a Subaru back at home then the extra coverage offered by the rental company may be a good idea. Any collision that is paid out by your insurance company for a rental car is considered an at fault accident and will increase your premiums.

Before traveling check with the credit card company that you’ll be using for your rental car. If there are any gaps in coverage with your personal auto policy, the credit card company could provide secondary coverage.

It is important to note that coverage can vary by state. Pay close attention to which states are no fault states, which will increase your premium due to any accident or claim in a rental car if you opt out of the rental insurance and use your personal auto insurance.

Know before you go. Most rental companies have a brief, predictable set of offerings. Check with your auto carrier to make sure you’re already properly covered and you may be able to decline the rental coverage at the counter. Rental car insurance is typically broken down into the following coverages:

  1. Personal Effects coverage
  2. Liability Coverage
  3. Collision Damage Waiver (CDW)/ Loss Damage Waiver (LDW)
  4. Personal accident insurance

Insurance You May Already Have:

  • Liability coverage: This is a basic component of most auto insurance policies. Check with your insurance carrier because you may be able to skip this one when it comes to insurance for your rental car. However, you can always be sued beyond your coverage limits which typically will not cover million dollar liability claims.
  • Personal accident insurance: This covers your medical bills in the event of a crash in the rental car. If you have personal injury protection or medical payments coverage on your auto policy and reliable health insurance, you may not need this coverage. 

Protection You Might Need:

  • CDW/Loss Damage Waiver: This is not an insurance product but a waiver that transfers financial responsibility from you to the rental car company in case of damage or theft.
  • Personal Effects Coverage: If you have a homeowners or renters insurance policy, your personal items will generally be covered if they are stolen from a rental car. Review your policy to be sure before you decline this coverage.

We recommend that you always get walk-a-way insurance at the rental counter, if offered. The rental company will call this a CDW or an LDW, both of these are optional damage insurance coverages.

If you do not purchase a CDW, the rental company may charge you towing, administration and “loss of use” fees – the money that the rental company forfeits by having a car in the shop instead of out on the road. These fees are not always covered by your insurance or credit card. 

To learn more about your auto insurance options, give us a call at 877.986.6908 and an educational specialist can review the best plan and carrier for you and your family.

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