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All You Ever Wanted to Know About Insurance

Does My Auto Policy Cover a Rental Car?

“I don’t need the rental car insurance offered by the rental agency, my current auto policy and credit card will cover it.” While that may be true, it is a sore mistake made by many. Let’s clear up all the misconceptions surrounding rental car insurance, and what you need to know before renting a car.

First, let’s talk about how your car insurance may extend to a rental car:

  • If you are renting a car for the short-term, or less than 28 days.
  • If you are renting a car for personal use. Please remember that your car insurance typically will not cover business use unless specifically noted. If you are renting a car for a business trip, you will not be covered.
  • If you are renting a car in the United States or Canada.
  • If you are driving with the rental agency’s permission, meaning anyone who may be driving the car is specified as a driver on the rental agreement.
  • If you have comprehensive and collision coverage, along with liability, underinsured motorist and personal injury protection coverage. If you opted out of comprehensive and/or collision coverage on your auto policy, you will not have this coverage on a rental car – so any amount of damage to the car, you will be responsible for.
  • If you are renting a private passenger vehicle, and not a moving van or other non-private passenger vehicles. 
    • If you are renting a moving van, your car insurance liability coverage may extend, but not collision or comprehensive, meaning there is no coverage for physical damage to the vehicle.
  • Loss of possessions note: if you are going to be carrying possessions in the rental car, be sure to check your homeowners or renter’s policy for loss of personal property. Typically, these are the policies that cover belongings that are damaged or stolen from your vehicle.

Will your credit card cover a rental car?

It’s possible. Some of the premium credit cards offer rental car coverage. However, contracts vary card to card, and there’s often a lot of fine print that changes frequently. If you are relying on coverage from your credit card and something goes wrong, you will have to trust your credit card company to help sort out the issue. Remember, a lot of credit card insurance benefits are “secondary” meaning they apply only after your personal auto insurance or insurance purchased through the rental car agency are utilized.

Loss Damage Waivers (LDW) – what should you know before signing?

Loss Damage Waivers are offered by the rental car company and protect you from financial liability for loss or damage to the rental car, its parts and accessories. We recommend this for many reasons:

  • If you do not have comprehensive and collision coverage on your auto insurance policy, you should buy the LDW.
    • Even if you do have comprehensive and collision coverage on your auto insurance, we still recommend you buy the LDW. This could save you from having to file a claim under your personal auto policy. That means, no deductible, and you will not be charged for loss of income or claims administration from the rental company.
    • If you have a high deductible on your auto policy, an LDW is in your best interest.
  • There is often fine print that stipulates that you owe the rental company for the loss of rental car income, if a car gets damaged or needs repair from your use. This means they will charge you for the days it cannot be rented until it is repaired. Many contracts have blanket charges that cover their costs for handling your claim of the rental car. These blanket charges may not specify an amount, so you could receive a frivolously high bill with no way out. LDW’s are typically $20/day, which is a potentially much lower cost than what you could owe in the event of an accident with the rental car.
  • Read the fine print, even when you’ve purchased the LDW. There will still be coverage exclusions, such as drivers not listed on the contract, driving under the influence, driving off-road or driving in dangerous terrains (that are often popular tourist destinations).

If you decide not to purchase the LDW, please be sure to inspect the vehicle and document any damage before it is driven off the lot. You can be held responsible for pre-existing damage if it wasn’t listed on the rental agreement.

If you are looking for ways to get additional protection outside of your own auto policy, these are great places to start:

If you’re worried about being overly cautious, or that you might be wasting money with duplicate coverage, call or text us at (360) 514-9550. As your trusted insurance advisor, we can help walk you through what the best option is for you and your unique situation.