If you’ve ever rented a car, you’ve probably had the clerk at the rental car counter ask if you’d like to purchase insurance for their vehicle. This begs the question, does your car insurance cover their vehicle?
The answer is generally yes but there are three things you need to know:
- You’ll want to ensure you have comprehensive and collision coverage on your auto insurance. These are the coverages that insure the vehicle itself against theft, storm damage, cracked windshield, car accidents, etc. Your auto insurance will typically extend to a rental car and will provide coverage as if you were driving your own car. So if you have a liability only policy, you more than likely need to purchase insurance from the rental car company to ensure the rental car is adequately covered.
- You’ll need to consider how long you’ll be renting the vehicle and where you’ll be renting the vehicle. Many auto insurance carriers will only cover a rental car for a certain number of consecutive days – perhaps 30 days or so. If you’ll be going on an extended trip, you’ll need to check your policy. Also, if you are taking a trip to another country you’ll need to purchase their insurance. Many auto insurance policy limit coverage to the US and its territories.
- Auto insurance doesn’t typically cover loss of use or diminished value. This is important because if you wreck a rental car, the rental car company will generally charge you for diminished value of the vehicle. Diminished value means the vehicle is now worth less than it was prior to the accident. As such, the rental car company will want you to pay the difference. Additionally, they’ll look to be reimbursed for the time the vehicle was out of service due to repairs. This means that if it takes 30 days to repair the car you wrecked, they couldn’t rent out the vehicle for those 30 days and therefore the rental car company will want you to reimburse them. The rental car company will generally waive these additional charges if your purchase their insurance but won’t waive them if you use your own insurance to cover their car.
Before you rent a vehicle, call you insurance company or your agent to ensure you’ll be adequately covered. Failure to ensure you’re adequately covered can end up costing you 10’s of thousands of dollars out of pocket if you get in an accident.
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