Your Rental Car is Damaged or Stolen

Damage and theft of rental cars is quite common. If you wait until the loss occurs to learn about how rental cars are insured, you may find that your rental car had next to no coverage. This article explains the different coverages available for rental cars, including that provided by rental car companies, your personal car insurance policy, and the coverage provided by your credit card company.

Rental Car Insurance

Rental car companies offer their own insurance for the car. This insurance relieves you of financial responsibility for the rental car if it is damaged or stolen. There are numerous exclusions, such as damage you cause while speeding, driving while intoxicated, driving on unpaved roads, or someone other than you is driving the car when the damage occurs.

Insurance provided by rental car companies often specify that the value of the loss is determined solely at the rental car company’s discretion. The amount determined by the rental car company may exceed the “actual cash value” amount determined by an auto insurance company. Similarly, the rental car company may even charge you for “diminution of value” of the rental car. This is generally not covered by your own car insurance or your credit card coverage.

This insurance can be somewhat expensive. In many cases it can cost $30 to $50 a day.

When you rent a car, the default is that you have this coverage. You have to specifically elect or opt out of coverage. This is why the coverage is referred to in the negative, as a “loss damage waiver.”

Your Auto Insurance

If you opt out of the insurance provided by the rental car company, then you may need to look to your own car insurance policy to cover the damage or loss. The same goes if you purchased the rental car company’s insurance, but it does not cover the damage.

In this case, your collision and comprehensive coverage would apply to the rental car. These coverages are in addition to the minimum liability car insurance that many drivers carry. If you do not carry these coverages, then you are retaining most of the risk that the rental car will be damaged or stolen.

Your Credit Card

Your credit card may also provide some coverage for rental cars. The terms of this insurance vary widely. You should read the terms carefully to understand what your credit card covers.

Generally, it applies if you opt out of the rental car company’s insurance and rent the car for a very short period of time. The coverage pays the excess amount not covered by your car insurance policy. It only pays for collisions and not personal injury or personal liability.

In addition, the insurance provided by credit cards also pays your deductible for your car insurance policy.

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