Going on Vacation? Do you Understand Rental Car Insurance?

Website: Insurance Information Institute

Material Excerpted From: iii.org – Articles

If you’re looking to rent a car, there are a number of options—the traditional brick-and-mortar companies, peer-to-peer car services, and car sharing programs—each with its own insurance parameters. 

No matter what company you choose, the most important step is to read and understand the car rental or car sharing agreement. Most companies clearly state what is covered as well as the supplemental coverage that can be purchased.

If you’re renting a car, check your own coverages first

Before you enter an agreement with any type of rental service, maximize use of the insurance you’re already paying for and avoid paying for duplicate insurance.

If you own or lease a car and/or have homeowners insurance, call your insurer to first check the following:

• How much coverage you currently have on your own car – In most cases, whatever auto insurance and deductibles you have on your own car would apply when you rent a car (providing you are using the rental car for recreation and not for business).

• If you have collision or comprehensive – If you dropped these coverages on your own car as a way to save money on your car insurance, you may not be covered if your rental car is stolen or damaged. Insurance rules vary by state, so it is best to check with your Hometown Insurance agent for the specifics of your policy.

• If you are covered for administrative fees, loss of use, or towing charges – Check to see whether your insurance company pays for—or provides a rider for—additional fees.

• Whether your homeowners or renters insurance covers the loss of possessions – These policies (not your car insurance) generally cover your belongings if they are damaged or stolen out of your vehicle.

The credit card you use to rent a car may also provide some insurance. Though coverage is likely to be limited—for example, it may only cover the deductible if you make a claim—it’s worth knowing what protections it will provide.

Insurance if you’re renting from a brick-and-mortar car rental

These traditional rental companies allow you to simply reserve or select a vehicle from one of the many generally available on any given day. The insurance you’ll be offered is fairly standard (though, like all car insurance, it varies by state).

While auto insurance regulations, costs, and coverage will vary by state and insurer, consumers renting from the traditional companies can generally choose from the following coverages:

• Loss Damage Waiver (LDW): Not technically insurance, LDW waives your financial responsibility if the rental car is damaged or stolen. It may also cover loss-of-use fees, towing, and administrative costs. However, it can be voided if you were speeding, driving on unpaved roads, or intoxicated. If you have collision/comprehensive coverage, you may already be protected.

• Liability Insurance: Rental companies provide state-minimum liability coverage, which may not be enough. If you have higher limits on your auto policy, you’re likely covered. Frequent renters without a car can consider a non-owner liability policy.

• Personal Accident Insurance: Covers medical and ambulance costs for injuries in a crash. Check if your health or auto insurance (PIP) already provides this coverage.

• Personal Effects Coverage: Protects against theft of belongings from the rental car. Consider this if your homeowners or renters’ insurance doesn’t cover such losses.

Insurance if you’re renting from a peer-to-peer service

Peer-to-peer car rental networks enable consumers to rent personally owned cars from others. Insurance coverage varies widely, depending on location and service.

• Peer-to-peer rental services (like Turo) may offer a range of insurance options and, under some circumstances, the driver may decline coverage.

Planning a fun getaway?

Before you hit the road, contact your Hometown Insurance Agency licensed broker to ask questions by calling 1-800-568-SAVE (7283) or email us at: service@hometowninsurance.com.

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