Rental Car Insurance
Many people rent vehicles without a clear understanding of how those rental vehicles will be covered. This can cause huge problems if the car is damaged. Make sure you understand rental car insurance before you sign papers or drive that car off the lot!
I want to try and clear up some of the confusion. But mainly, I just want to illustrate reasons why it is very important to figure out what coverage you have before you rent a car. This article is not intended to give professional advice, but to let you know that you should ask a professional!
The Rental Car vs. Other Vehicles
When we discuss any type of auto insurance, we need to think about the two main parts. Every state requires some sort of liability insurance. This covers the “other guy”. You may also have collision and comprehensive insurance, and this covers the car you drive.
I have seen confusion over this issue cause people to end up being responsible for thousands of dollars in damages when they rented a car! Make sure you understand the differences so you can protect yourself.
Your Own Auto Policy
If you own a vehicle, you must have auto insurance. Your own policy should cover you while you are driving a rented or borrowed vehicle. But before you rent, be sure and call your agent to find out exactly how the car will be covered.
Find out if your policy will cover damage to the rented car (collision) and damage to other cars (liability).
For example, if you own carry liability insurance on your own vehicle, you will probably only have liability insurance for the rented vehicle. This means you could still be responsible for damages to the rented vehicle if it is wrecked.
Also keep in mind that your policy probably has a deductible, and this deductible will apply to your rented vehicle as well.
Be sure you get your own agent or company to explain the coverage you will have from your own policy while you are driving a rented vehicle.
Credit Card Insurance
Some credit card companies offer automatic rental car coverage. Be careful though, because this may only be collision insurance. Liability insurance is what you need to be a legal driver in the US. This may work out well for you if you already have liability insurance from you own company, but need collision to cover the rented vehicle.
Again, call up your credit card company and be sure to find out what coverage you have. Do not assume the credit card rental insurance plan covers everything!
Rental Car Company Insurance
Most rental cars offer their own insurance plans at a daily rate. This can cover you, or it can supplement your own policy. The daily rate is usually expensive, but if you are not sure you are covered, and you do have an accident, it could be a bargain!
If you have followed my advice, and already figured out what coverage you have, it should be easy to decide if rental car company insurance is something you should buy.
Non-Owner Vehicle Insurance
If you do not own your own vehicle, but tend to rent or borrow cars a lot, you may be prudent to purchase something called non-owner vehicle insurance. This is usually a lot cheaper than owner insurance, and it is also cheaper than paying the daily rate for rental car company insurance if you rent a lot.
This may, however, only be liability insurance. It will keep you legal, and protect you against claims from other drivers, but it may not cover the rental car. If you do have collision insurance from a credit card, for example, you may be all set.
What Rental Car Insurance Do You Need?
Again, the best place to start is by asking your own auto insurance agent or company representative. If you think you have coverage from another source, be sure to verify it before you turn the ignition key in your rental car.