You’re standing at the rental car counter, ready to start your vacation or business trip, when the question comes:
“Would you like to purchase our insurance coverage?”
Now you have a decision to make. Do you pay extra for the rental company’s coverage, or does your personal auto insurance already protect you?
The answer is: your personal auto policy may provide coverage for a rental car, but it depends on your policy, your coverage, and how the vehicle is being used.
Here’s what you should know before you decline coverage at the rental counter.
Does Car Insurance Follow You to a Rental Car?
In many cases, the coverage you carry on your personal auto policy can extend to a temporary rental vehicle.
For example, if your personal auto policy includes liability, comprehensive, and collision coverage, similar protections may extend to a rental car.
However, there are important exceptions and limitations.
Insurance policies vary by carrier and state, which is why we recommend checking your specific policy before renting a vehicle.
Liability Coverage
Liability insurance helps protect you if you're responsible for an accident that causes bodily injury or property damage to someone else.
If your personal auto policy extends liability coverage to a rental vehicle, your existing liability limits will generally apply.
For example, if you carry $250,000/$500,000 bodily injury liability limits, renting a car doesn't automatically increase those limits.
This is one reason we encourage customers to review their liability limits instead of focusing only on whether they have "full coverage."
Comprehensive and Collision Coverage
If you carry comprehensive and collision coverage on your personal vehicle, those coverages may extend to a rental vehicle.
Collision coverage generally applies to damage caused by a collision with another vehicle or object.
Comprehensive coverage generally applies to covered losses such as theft, vandalism, hail, falling objects, and certain other non-collision events.
Your existing deductibles may also apply.
If you only carry liability insurance on your personal vehicle, you should not assume the rental car itself is covered for physical damage.
Rental Reimbursement Is NOT the Same Thing…
This is one of the most common insurance misunderstandings.
Rental reimbursement coverage helps pay for a rental vehicle while your insured vehicle is being repaired following a covered loss, subject to the terms and limits of your policy.
It does not necessarily mean your insurance pays for damage to a rental vehicle you're driving on vacation.
These are two completely different situations.
What About the Rental Company's Damage Waiver?
Rental companies commonly offer a Collision Damage Waiver or Loss Damage Waiver, often called a CDW or LDW.
Technically, this is generally a waiver rather than traditional auto insurance. The rental company agrees to waive some or all of its right to hold you financially responsible for certain damage to the rental vehicle, subject to the rental agreement.
Even when your personal auto insurance extends to the rental car, purchasing the rental company's waiver can sometimes provide additional protection or convenience.
Why?
Because a rental company may have charges that aren't handled exactly the same way as damage to your own vehicle.
Depending on the rental agreement and your insurance policy, potential issues can include:
- Loss-of-use charges
- Administrative fees
- Diminished value
- Towing or storage expenses
- Deductibles
- Other charges allowed under the rental agreement
This is why declining the rental company's coverage shouldn't automatically be treated as an easy way to save money.
Does My Credit Card Cover Rental Cars?
Some credit cards provide rental-car benefits when you use the card to pay for the rental. But credit-card benefits vary considerably.
Some provide secondary coverage, meaning your personal auto insurance responds first. Others may offer primary coverage under certain circumstances.
There may also be restrictions involving:
- Rental length
- Vehicle type
- Country
- Reason for the rental
- Who is driving
- How the rental was paid for
Before relying on a credit card, check the card's current rental-car benefit terms.
What About Renting a Car Outside the United States?
This is where you need to be especially careful.
Don't assume your U.S. personal auto policy follows you anywhere in the world.
Coverage can be limited or excluded when renting vehicles internationally, and individual countries may have their own insurance requirements.
If you're traveling internationally, contact your insurance agent and review the rental company's requirements before your trip.
Business Use Can Change the Answer
Using a rental vehicle for personal travel and using one for business aren't necessarily treated the same way.
If you're renting a vehicle for business purposes, transporting customers, making deliveries, hauling equipment, or performing other commercial activities, your personal auto policy may have limitations or exclusions.
Business owners should discuss these situations with their insurance agent before assuming a personal policy provides the necessary protection.
Before You Decline Coverage at the Rental Counter
Before renting a vehicle, find out:
- Whether your personal auto policy extends to rental vehicles
- Whether liability coverage applies
- Whether comprehensive and collision apply
- What deductibles would apply
- Whether there are restrictions on the type of rental vehicle
- Whether the rental is for personal or business use
- Whether you're renting inside or outside the United States
- What benefits, if any, your credit card provides
A five-minute conversation with your insurance agent before your trip can prevent a much bigger headache afterward.
Have a Rental Car Coming Up? Ask Us Before You Go.
Insurance shouldn't require guessing.
At The Talley Insurance Group, we're an independent insurance agency helping individuals and families understand their coverage and compare options from multiple insurance carriers.
If you're planning to rent a vehicle and aren't sure how your current auto insurance applies, contact us before you head to the rental counter.
We'll help you review your coverage so you can make an informed decision.
Talley Insurance Group
Independent Insurance Agency
615-241-8823
TalleyInsuranceGroup.com
Coverage varies by insurance carrier, policy form, state, vehicle, rental agreement, and individual circumstances. This article is for general informational purposes and does not modify or replace the terms, conditions, exclusions, or limits of any insurance policy.
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