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Does Your Auto Insurance Policy Cover Your Rental Car?

By Ryan Hurlbert on December 31st, 2009

Auto Insurance

When you rent a car, the agent at the counter usually asks if you want to purchase the additional insurance that the rental company makes available to their customers. You already have car insurance, but are you completely covered when you rent a car?

According to the Insurance Information Institute, rental companies generally offer four types of coverage:

  • Loss or physical damage waiver
  • Personal liability
  • Personal accident insurance
  • Personal effects coverage

Knowing what your personal auto policy does and does not cover makes the decision at the car rental company easy. Here is what the rental company offers, and where your car insurance policy may come up short.

Physical Damage Waiver

When you have an accident in a rental car, things get complicated quickly. You may be charged for:

  • Loss of Use: You may be responsible for the rental income the agency lost while the car was being repaired
  • Diminished Value: Accidents can reduce the value of a used car. Rental companies want to maximize the value of their vehicles because they liquidate cars at the end of their rental service. The agency can charge you for lost resale value due to your accident
  • Fees: You could be responsible for fees associated with your accident, including administrative, towing, and storage fees

Your auto insurance policy may pay for the damage to the car (less your deductible, of course), but may not cover the other charges.

Some credit cards provide coverage for damage to or theft of a rental car when you use your card to reserve the car and pay for the rental, but they may not cover loss of use, diminished value, or other fees.

Read your policy and cardholder agreements carefully before you get to the rental counter to make sure declining the damage waiver won't leave you open to significant losses.

Personal Liability

If you don't have an auto liability insurance policy, or your limits of liability are so low that you are nervous about it, you should probably buy the additional liability insurance offered by the rental company.

Of course, if your liability limits are so low that you need to get additional coverage, you should consider raising those limits. Get a fast and easy quote here and protect yourself.

Personal Accident Coverage

Personal accident coverage pays for medical and ambulance charges resulting from an accident. If you have adequate health or medical coverage, or if your auto insurance policy provides personal injury protection, you can skip this coverage at the rental counter.

Personal Effects Coverage

Personal effects coverage pays for loss of personal property from a vehicle. Your personal property is covered by your homeowners or renters policy, but is subject to your deductible. When you are on vacation, an inordinate amount of your property is in the car and vulnerable to theft. Depending on the deductible of your homeowners or renters policy and the cost of the coverage, you may want to consider personal effects coverage.

Remember that your auto insurance policy provides no coverage for personal items--even if damage or theft occurs in the car.

You should take the time to read your car insurance policy and cardholder agreements. If you haven't yet, this could be the incentive you need. Don't just call your agent and ask if you are covered, but be prepared to ask specific questions about loss of use and administrative fees.

No one wants to spend money on coverage they don't need, but it is far cheaper to buy unnecessary coverage than to pay for a loss. As long as you are reviewing your coverage, you should get a few quotes and make sure you are getting the most coverage for your premium dollars.

Source :
See average annual insurance rates for more than 2,000 vehicles

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