Rental Car Insurance Coverage On Personal Auto Policies: Necessary or Not?

If you haven’t looked over your auto insurance renewal declarations when they have come in the mail the last few times, it might be time to dig them out and take a look.

Many auto insurance customers don’t really know what’s on their policy or what’s and what’s not until it’s time to make a claim. That’s definitely not the best time to find out that you have a really high deductible or no roadside assistance.

According to the Property Casualty Insurers Association of America, the average driver will have an accident on average every 17.9 years. Over the course of a standard lifetime, you will have a total of three to four accidents. With numbers like these, it’s worth preparing and making sure any need you may have as a result of an accident is covered.

The good news is that you probably won’t be involved in a deadly crash, but most accidents will still be costly. Rising medical costs and litigation will drive the costs of these higher each year. That’s part of why insurance rates increase even if you maintain a good driving history.

But because it will be necessary at some point to be well covered for an accident, it’s worth spending the extra couple dollars to be sure you’d incur fewer out of pocket expenses in the event of a claim.

One of these extras available on your auto insurance coverage is your rental car insurance coverage. This will give you a rental car while your vehicle is being repaired, or in the case of a total loss, it provides you a temporary replacement until you buy a new one.

Without rental car insurance coverage you’d have to pay for a rental car out of pocket or hassle friends, co-workers, and family for transportation. That can become a big inconvenience fast, both for you and them. If you choose to pay for a rental car out of pocket after an accident, you could end up paying hundreds of dollars depending on how long it takes to fix or replace your car.


Does Your Personal Auto Insurance Coverage Extend To Rental Vehicles?

Some people get confused with rental car coverage and think it will pay for a rental car anytime they rent one.

For example, if you flew to Orlando for vacation and decided to rent a car to get to Disneyland, you can’t go to the rental office and give them your insurance card to get a free rental car. You would need to pay for the rental car on your own. If you get rental car coverage on your personal auto policy, that rental is ONLY available to provide transportation if the vehicle you’ve insured is being repaired or replaced from a covered accident.

However, one way your personal auto insurance coverage may relate to rental cars you rent for ‘leisure’ purposes is that your personal auto insurance may help pay for damage to any rental car you rent if an accident occurred.

In most states, on most standard or preferred policies, if you have full coverage on your auto policy for your personal vehicle, you may not need to buy the additional physical damage protection for the rental car. This will save you money on the rental, but that doesn’t mean exploring the insurance offered by the rental car company isn’t worth considering, as you may still need it.

Very often people decline additional rental insurance coverage from the rental company because they believe their personal auto insurance will cover any damage done to the rental car.

It will in most cases, however, a 40-year veteran of the auto insurance business, Donna McKenna, states she always purchases the additional coverage offered by the rental car company and that personal auto insurance policies may cover some things from an accident with a rental vehicle, but not 100%.

“There’s a lot more to it,” she stated.

No matter how much insurance you have, renting a vehicle is riskier than many people realize.


So What Do Personal Auto Insurance Policies Cover In Rental Car Accidents?

Most personal auto policies extend liability if you hit someone with the rental car, but only up to the liability limits on your policy. If you happen to be in the unfortunate position of hitting someone from a state whose insurance laws are different though, you may incur more out of pocket expenses.

Usually you can purchase additional liability protection for just a few dollars, and you should increase the liability on your personal auto insurance policy so you’re always better protected. It’s easy to assume $50K of bodily injury coverage would more than suffice in most accidents, but remember that’s a per accident limit. If you hit a van with a family of five in it and four are severely injured, and one dies, that $50K could disappear quickly, and you’d be responsible for anything over $50K out of pocket. Rental car or not, it’s worth increasing liability limits, and best of all, it’s often a matter of a few dollars a month sometimes to get $50K to $100K extra in coverage.

There are still gaps your personal insurance may not cover on rental vehicles. For one, if someone else causes damage to the rental, your personal auto insurance may not cover the damage, and if you decline coverage from the rental company, you could be responsible for that out of pocket too. Others causing damage can range from a ding in the door to a car being fully totaled, and nothing’s more sickening than paying to fix a car that’s not yours and that you didn’t cause damage to.

The other part which could cost you greatly is the loss of income a rental agency incurs if your rental car needs repairs from damage. That alone makes the rental car company’s insurance worth it, as the daily cost of renting a car can be expensive. If a rental car is in the shop for three weeks and you’re charged for everyday it’s un-rentable, that bill can add up quickly and you’re 100% responsible for it out of pocket.

Confirm coverage with your personal insurance company before waiving damage protection at the rental office. You want to be sure when you sign on the dotted line that you know exactly what you’ll be responsible for if you have an accident in the rental car. If your insurance company says your physical damage coverage extends to the rental, be sure to discuss the details of the waiver with the rental company.

Driving in an unfamiliar place, especially a crowded tourist destination, can be stressful and often cause people to be more prone to accidents. You want to be sure if you’re the cause of an accident that you have enough coverage to pay for injuries, property damage, and sometimes, lawsuits if you’re sued due to causing an accident.


Key Takeaways

If you are buying personal auto insurance for your car, it’s definitely worth considering adding rental car coverage onto your policy so you have transportation if there’s an accident. Additionally, you’ll pay much less towards having it on your policy than you would paying it out of pocket. Just remember that you usually have to have physical damage coverage (comprehensive and collision) in order to get rental car coverage, and there are usually limits to how much it will pay, such as a per diem limit or a cumulative max of $900. If you have liability only, you usually can’t buy rental car coverage.

Remember that if you do buy rental car coverage on your personal insurance policy, it’s not going to pay for a rental vehicle whenever you want one—that coverage is only there if your car is being repaired or was totaled and you need a rental car in the meantime.

Regardless of why you’re renting a car, whether you’re getting one for vacation or getting one because your personal car suffered damage and is being repaired, you should consider getting the extra rental insurance coverage offered by the rental car company, as your personal auto insurance will not always pay for damage you cause to the rental car—including damage that may not be your fault.

All in all, when it comes to anything to do with rental cars and insurance, always read before you sign the dotted line and always find out what you’re covered for and not covered for when you buy any kind of insurance. With summer now in full swing, understanding every aspect of rental cars and insurance is more important than ever.

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