Do I Need to Buy Insurance for a Rental Car?

Rental Car Insurance: Do You Really Need It?

It’s happened to all of us.  You’ve gotten off the plane.  You are ready to begin a fun vacation, when suddenly you are faced with a decision when renting a car.  Do you want to buy the insurance that the rental company is offering you?

This is a complicated question and the answer changes based on many different scenarios.

Let’s start with your current insurance policy.

In most scenarios, there will be some coverage that transfers from your personal auto insurance policy to a rental car. Many policies will extend liability and physical damage coverage from your personal auto policy to a rental car.  However, this means the insurance you have on your rental car will never be more than the insurance you have on your personal policy.  If you have a liability limit of $300k on your personal policy, that is all that will extend to your rental car.  This also means if you don’t have coverage for physical damage on your personal policy, that coverage won’t extend to a rental car.  So, make sure that the coverage on your personal policy is adequate for the coverage you want on your rental car.

If your current policy extends some coverage to your rental car, why would you buy the insurance that the rental car company is offering?  Here are some possible issues you might experience by not taking the insurance offered by the rental car company:

  • Most personal auto policies only extend to certain geographic areas. If you are traveling to a foreign country (especially overseas) you might not be extended any coverage from your personal policy.
  • The type of vehicle rented can also impact potential coverage. Your personal auto policy is meant to cover particular types of vehicles.  If you are renting things like RV’s, large vans, U-Hauls, or motorcycles coverage might not extend.
  • The rental car company may also charge you for the loss of use of the vehicle while it is being repaired. If a vehicle can’t be rented for three weeks while it is being repaired, the resulting lost revenue might be owed to the rental car company.  This loss of income is not covered by your personal insurance policy.
  • While it is uncommon, some rental insurance companies will ask you to pay for the diminished value of the vehicle. An accident may lower the future value of a vehicle. Your insurance company will not cover this cost.
  • If you are renting the car for business purposes, there is potential that your personal policy will not cover you.
  • The rental company might require you to pay all damages immediately. Even if your insurance company ends up paying the claim you might have to personally pay for the damages while your insurance company adjusts the claim.
  • The rental car company is not a party to your insurance contract. As a result, there could be contractual obligations between you and your insurance company that the rental car company can completely disregard.  This can lead to many types of disagreements between the parties over the course of negotiations of how the claim is handled.

If you have any questions about how your particular policy might respond if you rent a car, please reach out to your Hertvik Insurance agent.


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