At last, that much anticipated vacation has arrived. You are sitting at a stoplight on your way from the airport to the hotel when suddenly you are jolted forward as another car rear-ends you. A million thoughts rush through your head. One of them is the fact that you didn’t purchase the added insurance when you picked up your rental car. So you ask yourself, does auto insurance cover rental cars?
In Many Cases, Your Insurance Policy Covers a Rental Car
Generally speaking, a car that you rent will be covered to the same extent that your personal vehicle is. In many cases this means the coverage from your policy will overlap the additional coverage when purchasing insurance from the rental company. However, if you have a high deductible and minimum coverage on your own vehicle, you could be looking at some hefty expenses if your rental car gets damaged. So, it’s important to be aware of what your personal policy covers when renting a vehicle.
The only way to know for sure is to check with your provider, or look over your insurance policy. Be sure you know what the different insurance terms are when comparing your personal auto insurance and the coverage being offered by the rental company.
The best way to handle questions if you have them is to ask! It’s never a good plan to assume you are covered in any given situation. So reach out to your agent and get clarification on what is covered in your policy.
Types of Coverage from Your Standard Auto Policy
Liability coverage is a sweeping term that encompasses damage, bodily injury, and death. It is often broken into Liability and Property Damage Liability. Liability refers to payment, as well as legal defense, when you are at fault in an accident that results in physical injury or death. Property Damage Liability refers to protection in the event another person’s property is damaged by your car.
Collision coverage is a part of most auto insurance policies, providing coverage when your vehicle is damaged and needs repairs or replacements following a collision with another vehicle, an object (like a tree), or when your vehicle is damaged in a rollover incident. This type of insurance specifically covers your liabilities for repair or replacement for your own vehicle – not another vehicle.
If you have collision on your policy, it’s possible that it can provide coverage for your rental car. Keep in mind that this isn’t a guarantee – it varies from insurance provider to provider. The best way to know if your collision coverage extends to a rental car is to read your policy or speak with your insurance agent.
Comprehensive coverage, as the name suggests, covers a wide range of damages that help supplement liability and collision insurances. While the other two types of insurance help with costs associated with car accidents for your vehicle or the other party’s vehicle, comprehensive policies cover other incidents, such as:
- Tree limbs
- Damage from Wildlife
- Natural Disasters
Like other types of auto insurance coverage, your comprehensive coverage could extend to your rental car in case of an incident. Again, it’s important to note that this isn’t always the case and will vary depending on your specific provider and policy.
Where Your Coverage Might Be Lacking
Because the relationship between your standard auto policy and rental cars is dependent on your specific provider and policy, there are a handful of other coverages you’ll want to be aware of that may be missing without looking into a specific rental insurance policy.
Loss of Use – Any accident may leave your rental car inoperable for a period of time. During this loss of use, the rental company may require you, as part of your signed agreement, to continue paying the rental fee as you are liable for it being inoperable. Insurance can cover this cost associated with loss of use, but you need to specifically have an endorsement on your policy for this type of coverage.
Diminished Value – Simply being in an accident affects a vehicle’s resale value. This is known as diminished value. The same applies to rental cars. The rental company may hold you liable for the difference caused by diminished value. Certain additions to your standard insurance policy can protect you from these types of costs, but you’re unlikely to have this coverage without specifically adding it to your policy for a rental vehicle.
Is Rental Insurance Worth It?
If your insurance doesn’t cover rentals, it’s a good idea to buy the rental insurance. For instance, if you rent a vehicle once in a blue moon and have therefore chosen a policy that doesn’t cover rental cars, it would be in your best interest to purchase the rental car insurance from the rental company when you rent a vehicle.
Another scenario where purchasing the rental car insurance is worth it is when you don’t want any hassles at all should there be any damage to the rental car. When you purchase a rental company’s collision damage waiver (CDW) nearly any damage to the rental car is completely covered (one common exception is gross negligence which generally is not covered).
While the details vary between car rental companies, you are for the most part, paying for the peace of mind that the rental company is waiving you from any responsibility for damages to the rental car. It’s also worth noting that paying for insurance from the rental car company could let you avoid having a claim paid out on your personal auto policy if you do end up causing damage to your rental vehicle.
Always read the terms and conditions carefully as they may be different with each individual car rental company.
Another option is to add an endorsement to your auto insurance, if necessary and available, before you rent a vehicle. A quick call to the office can update your policy to include rentals, often immediately or within 24 hours. Either way you decide, the one thing you never want to do is drive a rental vehicle without insurance!
Contact Iott Insurance for a Quote Today
Iott Insurance has been a part of southeast Michigan for over 50 years. We can help you plan your insurance needs and find you the right policies or plans to protect you.
Or you can visit one of our three offices in southeast Michigan:
Blissfield, MI – (517) 628-4574
Lambertville, MI – (734) 807-3825
Petersburg, MI – (734) 215-9884
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