I’m frequently asked, “Craig, do I need to buy the rental car insurance when I rent a car?” And the answer is, “Yes … or No.” It depends on several factors.
Check your personal auto insurance policy
If you have a personal auto policy with adequate coverage, you shouldn’t have to purchase rental car insurance. Do you have a “comp and collision” deductible? Do you have property coverage to protect you if the vehicle is damaged, plus liability coverage if you hurt someone or damage their property?
Now, if you’re using the rented vehicle for business use, your personal auto policy is not going to cover it.
Check your credit card insurance coverage
There are some other times when you don’t need the coverage. You might actually have coverage on your credit card.
That’s something a lot of people don’t know. So have a conversation with your credit card company, and look on their website. Learn as much as you can about how your credit card can protect you when renting a car.
There may be special rules with credit card companies. For example, they may specifically require you to waive the rental car company’s insurance to qualify for coverage under the credit card.
Liability insurance only?
When should you consider using the rental car company’s insurance coverage? One situation is when you only have liability coverage on your personal vehicle. That type of coverage would only cover the other driver’s medical bills and property damage.
The rental car would not be covered.
Supply shortages affect insurance decisions
Current events have greatly affected supply and demand within the rental car industry, which creates increased risk and liability when you rent a car.
Plus, tourism is on the rise, and there’s a significant shortage of rental cars in gerneal.
A client of mine recently rented a vehicle while on vacation, and the windshield was damaged pretty significantly. So the car couldn’t be rented while it was being repaired . And a repair can take even longer due to supply and worker shortages.
“Loss of use” insurance coverage
For situations like this, you need “loss of use” coverage.
The rental car company says, “Hey, we’ve got a vehicle that we can’t rent right now, because it’s been damaged in an accident. Therefore we’re losing income. So we’re going to charge you for that lost income.”
Some insurance carriers will cover you in those instances, and some won’t.
The rental car company is losing a lot of money on a daily and weekly basis. And they may try to charge you for that.
But a good insurance carrier may fight that battle for you.
My client’s rental car was out of commission for six-months! That rental car company tried to charge them for six months of lost rental income.
This resulted in a lengthy discussion between the insurance carrier, the client, and the rental car company to find out who would pay up.
Another issue related to rental car insurance is “diminished value.”
When you purchase a vehicle, you probably run a Carfax vehicle-history report to see if it’s been damaged in an accident.
When you damage a rental car, you negatively affect that vehicle’s future value. When the rental car company eventually sells that car, that damage history report will show up
and they’re not going to get as much money for it. So they may charge you for that loss of future income.
Talk to your insurance agent before renting a car
Those are some good conversations to have with your agent before going on vacation and renting a car.
The best advice I can give you is to call your insurance agent (Call Craig Henley Mr. Insurance™) before you go on vacation.
Ask lots of questions. We’ll look at who your carrier is, what the coverage is, and make sure that we’ve answered every question in the most appropriate way.
We can also look at what kind of car you’re renting, and make sure that we’re protecting you in the most adequate way.
About Mr. Insurance™
Mr. Insurance™, Craig Henley, is an independent insurance agent serving greater Springfield, Missouri. He researches a variety of carriers to provide personal insurance (home, auto, umbrella, and more) plus commercial insurance (property, liability, workman’s comp, and much more). Craig is with First State Insurance Agency in Springfield, MO. Website: MrInsurance.net. Email: Craig@MrInsurance.net. Phone: (417) 430-7782. Facebook: @mrinsurancespringfield. Linkedin: @henleycraig.
Phone: (417) 430-7782