Rental Car Coverage – What to Know

As an agent, one of the most common questions I get is ‘when I rent a car, do I need to purchase the insurance the company offers?’. There is really no easy answer to this question. If you have a policy that has liability, Comprehensive and Collision it usually transfers to the rental car, although you will want to verify this in the policy language or ask your agent. I always tell my customers that if your coverage does transfer to the rental car the insurance company will pay just those coverages in the event of a loss. However, you sign a very large contract with the rental car agency. There are two main things that your insurance company likely won’t cover, but you will be held responsible for based on the contract you signed with the rental car company:

  • Loss of Use Charges – in the event that car is in the shop being repaired the rental car company will charge you per day and it is usually the highest per day rate not what you are paying per day.
  • Depreciation Charge – lets say you rent a car and you have an accident, the rental car company wants to sell the car at auction after it has been repaired. Well, the car has been wrecked which in turn lowered the value. They have the right per the contract you signed to charge you the difference, and remember you gave them a credit card when you rented the car!!!! However, check with your credit card company because a lot of them will include the CDW or Collision Damage Waiver coverage if you use their card to rent the vehicle. They will reimburse your deductible and cover the other things that your insurance won’t.