A common auto insurance question this time of year is about purchasing rental car insurance from the rental car company. While this varies, depending upon your carrier and your coverages, for some people there may be no need to purchase the rental car insurance from the rental car company.
For most of our carriers (including Erie, Allied, Allstate, Safeco, and Progressive) the coverages on a personal auto insurance policy extends to a rental car. These coverage extensions include Liability, Un-Insured & Under-Insured Motorist, along with Comprehensive & Collision Coverages.
To be properly insured on a rental car you will need all of these coverages (many people refer to this as “Full Coverage”). If you only have liability coverage on your auto (many people refer this to as PLPD) you will need to either increase your personal auto coverages to include comprehensive and collision coverage or purchase the rental car insurance from the rental car company.
The Deductibles Still Apply
Remember that if there is any type of damages to the rental car that you’re deductible would still apply. If the deductibles are $500 and there is any damage to the rental car, you may be out $500. For this reason, we advise our clients to lower their deductibles while they are renting a car.
It also a good practice when renting a car to do a complete inspection (inside and out) of the vehicle before driving away from the rental car company’s parking lot. If you do find damage, quickly report the damage to one of their representative and document the damage by a picture, and then email that picture to yourself so that it is date stamped.
One Coverage Gap
If you elect to not purchase the rental car insurance from the rental car company and instead use your personal auto insurance coverages, there is one potential gap that you need to be aware of, “Loss of Use”. Loss of Use would come into effect if the car is damaged and has to go to the shop to be repaired, and the rental car company has lost earnings by not having that car on the road being rented out. It’s the rental car company’s “loss of use”, or lost income.
For example if the rental car company normally rents out your damaged car for $50 per day and it is in the shop for 10 days, they could say that they lost $500 in income ($50 x 10 days). They will want you to pay that $500, and your personal auto insurance policy does not cover this.
If you have questions or doubts about what kind of coverages you have, call your agent and have the do a full policy review that includes how your personal auto coverage extends to rental cars.