Is this a familiar scene?
You arrive at the airport and need to get a rental car for your family vacation.
The rental car attendant tells you what they have available. You pick out an economical car (because you know with inflation right now, you need to find ways to save money–no fun Jeep with the top removed for you. It’s a Toyota Prius hybrid instead.)
Anyway, the attendant puts a ton of paperwork in front of you to sign before leaving with the car. And one of those papers is the option to purchase rental car insurance.
As I said, you don’t want to spend on something you don’t need. So, do you need the rental car insurance?
Will your auto insurance policy cover you if you’re in a rented vehicle?
With the summer vacation season right around the corner, we thought this was a good topic to cover. How do you know if you should buy the insurance recommended by the rental car company?
This article will explain the top three reasons you should purchase rental car coverage.
- Your auto policy does not include comprehensive and collision coverage.
- You don’t want to file a claim on your auto insurance.
- Your auto insurance policy doesn’t cover “loss of use” for a rental vehicle.
Let’s take a quick look at each of these reasons.
1. Your auto policy does not include comprehensive and collision.
The type of insurance coverage you have on your auto insurance policy is the most significant factor that affects whether or not you need to purchase the insurance offered by the rental car company.
You have one of three types of auto insurance policies: liability-only, liability and comprehensive, and liability with comprehensive and collision.
If your policy includes both comprehension and collision coverage on your auto insurance, your insurance will cover the rental car if you are in an accident. Your insurance company will pay the repairs and even a total loss if you are at fault for an accident in a rental car.
However, if you only carry liability or liability and comprehensive, you must purchase the rental car coverage. If you don’t, you will not have any coverage.
2. You don’t want to file a claim on your auto insurance.
The second reason you should consider purchasing the rental car insurance is this: If you are at fault for an accident in a rental car and buy the rental car insurance, the accident is filed as a claim on that insurance policy.
However, suppose you refuse the rental car insurance and choose to rely on your insurance policy. In that case, any accident you have in the rental car will be filed against your personal insurance.
This could mean that your insurance rates will go up at your renewal. And depending on your accident history, your auto insurance policy could even be canceled.
3. Your auto insurance policy won’t cover “loss of use” for a rental vehicle.
If you are relying on your personal insurance to extend to a rental vehicle, you should know about this one relating to rental cars. Let me explain it by giving you a brief scenario.
You refuse the rental car insurance and rely on your personal auto insurance policy when renting the car.
As you’re driving around your vacation destination, you make a wrong turn and sadly cause a minor fender bender. The car isn’t totaled, but it’s also not driveable.
The rental car ends up going to the shop for repairs.
While the car is not operable, you are responsible for continuing to pay the rental fees. This is called “loss of use.” The rental car company has lost the use of the vehicle, so you have to cover that loss out of your pocket.
Your personal auto insurance policy carries no coverage for “loss of use.”
And with the supply chain problems we’ve had lately, it is common for a vehicle to take longer than usual for repairs.
If you are renting a car for $50 a day, and it ends up being in the shop for three weeks, you’re looking at paying over $1,000 for loss of use while the rental is being repaired.
Are you looking for answers to your insurance questions?
Insurance is a complicated business, and most people have questions about their insurance policies. Many people think they understand what they’re buying and then are surprised when they have a denied or rejected claim.
As in the last scenario above, insurance is not always clear-cut. You may think you’ll be covered by your insurance policy but don’t realize that there are exclusions on your policy that specify times you won’t have coverage.
To help our clients, we continually add articles to our learning center to help them be informed about the insurance products they are purchasing.
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