Maybe you’ve been here before. You’ve just come off the plane, picked up your baggage and gone to the rental car counter. You’re tired from the flight, about to begin an ambitious vacation or a challenging business project. And, this is the point at which you’re asked, “Do you want insurance with that?”

Most travelers, facing that question from the rental representative, have the vague notion that they don’t really need to buy rental car insurance – which somehow is covered already. With just enough doubt in their minds, and the need to make a quick decision, perhaps they buy it just to be safe.
So, which is it?

Do you need to buy rental car insurance or not?

Truth be told, there isn’t a one-size-fits-all answer. However, you can likely reach a conclusion you’re comfortable with by considering these three questions.

1. What Types of Rental Car Insurance Are Available?

Typically, car rental agencies will offer you four types of insurance to purchase:

• Collision damage waiver – The rental car company won’t charge you for a damaged or stolen vehicle when you buy this.
• Supplemental liability protection – Electing this will ensure you’re covered for costs to others if you cause an accident in the rental.
• Personal accident insurance – This coverage will pay for injuries or death of the driver and passengers of your rental car.
• Personal effects coverage – Reimburses you for stolen personal items while renting the car.

2. What Rental Car Coverage Might I Already Have?

Start with your personal auto insurance. It’s likely that your policy will provide the same level of coverage for your rental as it does for your own car. That usually includes liability insurance, and, depending on the policy you purchased, may include collision, comprehensive and medical payments, too. There are exclusions, however. Some insurers won’t cover rentals in a foreign country, or rentals that are being used for business. Get in touch with your independent insurance agent to verify your coverages.
Next there’s your credit card. Most cards offer some degree of coverage, but it varies widely. Coverage is usually secondary, designed to step in and pick up where your auto insurance leaves off, and it tends to be mostly confined to collision, damage and theft. For coverage to apply, most cards require that you decline the rental company’s collision damage waiver and pay for the car in full with the card that provides the protection. Again, contact your card company to find out exactly what is covered.
Then, consider your health and life insurance, too. If you’re in an accident involving a rental car and you have these policies, you likely have coverage for your own costs. Plus, with your homeowners insurance, you may have personal property coverage to help repair or replace valuable belongings that are lost, damaged or stolen while you’re in a rental. Your deductible and policy limits will apply, and the same goes for renters insurance or condo insurance.

3. What Rental Coverage Might I Be Missing?

In the event something does happen to the rental car, you may be looking at loss of use and diminished value fees, and your regular policy may not cover them. Loss of use is the income that the rental agency loses due to the vehicle being in the shop for repairs, and diminished value is the calculated reduction in a vehicle’s resale value as the result of an accident. Credit cards sometimes cover these, but be aware that they may require documentation that rental agencies can be reluctant to provide.

So, before you make that next trip, give us a call and check with your credit card company. That way you’ll be ready to make an informed decision when you get to the rental car counter.

Reposted with permission from the original author, Safeco Insurance®.
Top image by Flickr user Timo Newton-Syms used under Creative Commons Attribution-Sharealike 2.0 license. Image cropped and modified from original.

If you are like most people, it's always in the back of your mind when you decline the car insurance when renting a vehicle while away on vacation or business.
If you've ever opted for full supplemental coverage, you've likely noticed that the cost of your rental skyrockets by more than 50% in many cases. But, if you already have insurance for your personal vehicle, you likely don't need it.

There are two reasons you may want to forgo agreeing to purchase insurance at the rental counter:

1. Your existing insurance
The insurance policy for your personal car or truck will usually cover you for a variety of risks:

• Liability - The liability coverage you have on your personal car or truck will extend to damage to other cars or property caused while driving a rental car.
• Collision - If you have collision coverage as part of your regular policy, it may cover accident-related damage to the rental vehicle as well.
• Comprehensive - If you have comprehensive coverage on your personal vehicle, it can even cover vandalism or theft of your rental car. 

Coverage varies from policy to policy, so check with us before you decide.

2. Your credit card
Some credit cards, particularly gold or platinum ones include rental car insurance. This applies only if you use the same card to pay for your rental car.
Terms and conditions vary, but generally:

• Cards offer primary coverage that won't require you to make a claim under your regular insurance policy.
• Cards offer secondary coverage that will help you out with the deductible and other costs. Typically, you must decline the supplemental insurance offered by the car rental company in order to obtain the credit card company's insurance coverage.

 
Read up on this in the terms and conditions of your credit card so that you understand exactly what the card covers in terms of rental car insurance. For example, you may not be able to rent certain types of vehicles, or it may not cover certain damage, like from driving on a dirt road.
Card issuers frequently cap rental periods as well. Make sure you know what your credit card company offers before you rent a vehicle.
 
But wait… there's more
If your personal insurance policy doesn't include comprehensive or collision coverage, you may want to purchase liability coverage from the rental company.
 
It may also be wise to do so if you already have a high deductible on your personal auto's insurance policy. Also, if you're renting a car on a business trip, or intend to drive it into another country (other than Canada), you will likely need additional coverage. 

If you have any questions, call us.

Linda is a junior partner in a law firm and drives a car that the firm owns and insures. The firm's auto insurance covers her as a partner and she doesn't own another car, so she sees no need to have her own policy.  

Most of the time, this is not a problem. However, spring break comes and she takes her kids to DisneyWorld. She rents a car at the Orlando airport and never gives a thought to whether her firm's insurance will cover her if she has an accident with the rental. In this case, a phone conversation with the firm's insurance agent would have been a great idea.

While driving to her hotel one night, Linda rear-ends a new Lexus. The damage to the other car is extensive; Linda looks to her firm's auto liability coverage for the cost of repairing it. 

The ISO Business Auto Policy covers the person or organization shown in the policy declarations (the information page at the beginning.) In this case, the name shown in the policy Declarations is the name of Linda's firm. 

The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm's permission, a covered auto the firm owns, hires or borrows, with some exceptions. 

Unfortunately for Linda, the firm didn't rent the car; she did … in her own name. Consequently, the firm's insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds.

However, there are a couple of policy endorsements that her firm could have purchased that would have solved Linda's problem. 
 

Drive Other Car Coverage - Broadened Coverage for Named Individuals

The insurance company will require the insured to list the names of one or more individuals on the endorsement. 

The change extends several of the policy's coverages so that they apply to the listed individuals and their resident spouses. This endorsement comes with some significant limitations:

• It extends to the listed individuals coverages that the policy already provides; it does not add coverages not provided. If the firm's policy does not provide collision coverage on its vehicles, Linda would not have collision coverage on a car she rents.
• It covers the named individual's spouse if they live together. If Linda is married to Jim, Jim automatically has coverage for a car he rents in his name. 
• The only family member it automatically covers is the resident spouse. It will not cover any other family members in the household unless the endorsement specifically lists their names.

Individual Named Insured

An alternative to this endorsement is to list individuals' names in the policy declarations along with the firm's name and attach an endorsement called Individual Named Insured. 

The endorsement covers the individual listed in the declarations and automatically covers the person's resident spouse and family members. It also covers these individuals should they injure another of the firm's employees.

These policy changes affect several coverages, including liability, uninsured motorist, medical payments, and physical damage. 
​
If you are considering doing this, you should consult with us to discuss the endorsements' details and identify the one that will best insure the concerned individuals. With the right coverage in place, Linda can enjoy her vacation without having to worry about who will pay for the fender-bender.