March 15, 2022
Renting a Vehicle on Vacation
We’ve all been there. You’re at the rental counter and they ask you if you want to purchase insurance. But you have insurance! Shouldn’t that be enough? Maybe… maybe not.
Most auto insurance policies will cover your temporary rental vehicle, however what your policy provides and what the rental company requires doesn’t always jive. Rental agreements typically state that you are responsible for several items that your auto policy may not cover such as the loss of use of the rental, and new replacement of a totaled rental car. It’s important to talk to your agent before you travel to find out what your policy will and will not cover. There are a few ways to cover these “gaps” in insurance.
Rental agencies generally offer different levels of coverage: full liability and collision (expensive) and limited coverage (collision damage waiver, or loss damage waiver) may cover the gaps between your auto policy and the rental agreement. And there is another, often overlooked way to grab the coverage you need.
Many credit card companies include travel benefits which may include extra insurance for your rental. It’s important to read your credit card’s policy so see if this benefit exists and if it would work for you. Keep in mind, there are often restrictions. Many of these policies do not cover some high end or exotic vehicles, may restrict how long you can use the rental, and may only apply if your rental is used for personal use (if using a personal credit card) or business use (if using a business credit card). These travel benefits may require that you charge the full amount of the rental costs on the credit card in order for coverage to apply.
It is also important to know where you are allowed to use the rental car and who is allowed to drive it. Feel like taking a drive off-road? That may not be allowed. Want your spouse or friend to take over driving? Make sure they are listed as an authorized driver on the rental contract.
Remember, when you rent a vehicle you will be required to give the agency a credit card and that’s not just to pay for your rental. If you have an accident (whether you are at fault or not) they may be able to use your credit line to reimburse them for any loss not covered by your auto policy, or they can bill you for the difference. We’ve had customers receive bills and even collection notices for unpaid losses, sometimes for thousands of dollars.
So before you deny the rental company’s insurance, make sure you know what you’re covered for and what you’re risking. A fun vacation may end with unexpected expenses but it doesn’t need to. Talk to your agent and thank me later!
