What a great day! You just spent the last
eight hours sitting on the beach watching the waves. You’re all packed up and heading
back to the hotel when BAM! – the guy in front of you slams on his brakes.
Ok, no need to worry, you’ve got insurance! But wait a second…this isn’t your car. Does
your insurance cover rental cars? Did you make the right decision on rental car insurance?
The good news is most personal automobile policies extend coverage to rental vehicles,
covering you for both collision and other-than-collision losses – also known as comprehensive – provided
you have those coverages on at least one vehicle on your auto policy.
Typically, your policy’s comprehensive and collision coverages will extend to you and
other members of your household who are operating the rental car.
However if you don’t have full coverage on at least one vehicle on your personal auto
policy, you may need to look into purchasing the rental company’s Collision Damage Waiver,
or CDW, which is offered at the time of rental. A CDW policy protects you from financial responsibility
for theft or physical damage to the rental car while it’s in your possession. A CDW does
not, however, cover your personal liability for bodily injury or property damage.
Some rental companies may include conditions and restrictions which can void the CDW under
certain situations, like violating a traffic regulation, so be sure to understand the terms.
Often times, a CDW does not cover “loss of use”. This means that if the rental car is
damaged while in your possession, you could be responsible for paying the daily rental
fee until the car is returned to service. That could get expensive if the repair shop
required three weeks to fix the damage! The good news is if you have a personal auto policy,
you might be covered for “loss of use”. Rates for a CDW vary depending on the type
of coverage. Some rental companies may allow you to select smaller amounts of coverage
for a reduced fee. If you have a credit card, your credit card
company may also offer a “free” CDW coverage if the fee for your rental car is charged
to that credit card. Generally the coverage provided by your credit
card tends to be “excess” over any other coverages in place–including your personal
auto insurance coverage. This means coverage is only available after the limits of your
other policies have been reached. Call your credit card company before you rent to find
out if they offer a free CDW. The next time you start planning your getaway,
be sure to keep these helpful tips in mind so that you can decide the best way to handle
insurance coverage on your rental car: – Ask the rental car company about their terms
ahead of time so you know your financial responsibility in the event of a loss.
– Be sure to inspect the vehicle before leaving the lot and note any damage in your rental
agreement so you’re not stuck paying for someone else’s mistake.
– If you prefer to rely on your own personal insurance policy as coverage, carry a copy
of it with you on your trip, both as proof of insurance and as a handy source of the
terms of coverage. Most importantly, contact your independent
insurance agent They can guide you in making sure your rental vehicle is properly insured
so you can travel with peace of mind.