Rental cars are integral to modern travel, providing flexibility to individuals seeking adventure and convenience. These vehicles are a go-to solution for business trips, vacations, or simply as a replacement vehicle. However, when you rent one of these cars, you may be confronted with the offer of additional auto insurance coverage. Do you need to purchase this? Does your existing auto insurance coverage extend to rental cars? In this article, we will expound upon the ins and outs of auto insurance and its relation to rental cars. Whether planning an international vacation or a business trip, read this article before renting your next vehicle!
The Basics of Auto Insurance
Auto insurance is a necessary financial safety net that protects you and your vehicle in the case of an accident. Basic car insurance typically includes liability coverage, which pays for damages and injuries you may cause to others when you are at fault in an accident. This includes medical expenses, legal costs, and repairing the damaged vehicle. Liability coverage typically follows the driver rather than the vehicle, meaning that it can be used when you drive other vehicles. Some policies, particularly those for vehicles with lien holders, may include comprehensive and collision coverage. Comprehensive coverage pays for non-collision-related damages to your vehicle, like vandalism and natural disasters. Additionally, collision coverage pays for repairs on your vehicle if it is damaged in an accident, regardless of fault.
Understanding the fundamentals of auto insurance creates a foundation for exploring how auto coverage extends to rental cars and what additional actions should be taken when renting a vehicle.
Auto Insurance and Rental Cars
Often, your auto insurance policy will extend coverage for rental cars, but this comes with several caveats. The extent of coverage will vary depending on your policy type and the state where you live. Liability coverage almost always extends from your policy to rental cars. However, comprehensive and collision coverage is often not automatically extended to rental vehicles. It is also important to note that your deductible and coverage limits will extend to the rental vehicle.
To compensate for these holes in rental coverage, many rental car agencies and insurance agencies offer additional car insurance options. This protects you in the event of damage or theft of a rental car.
Why is Rental Car Insurance Offered?
You may notice that rental car agencies will offer additional auto coverage when you pick up your rented vehicle. These options range from regular liability coverage to collision damage waiver (CDW) and loss damage waiver (LDW). Collision damage and loss damage waivers are designed to cover the cost of damage or theft of the rental vehicle designed to cover the cost of damage or theft of the rental car. These policies are offered to minimize the risk to the rental company and prevent financial strain on the company. While these policies provide peace of mind, you may not need additional insurance; your existing coverage may already offer enough protection. If you already have an auto policy, check with your insurance carrier about what coverages beyond liability coverage will extend to your rental vehicle.
When Do You Need Rental Car Insurance?
There are some situations when purchasing rental car insurance may be necessary. If you do not own a vehicle, likely, you do not already have an auto policy. In this case, purchasing insurance from the rental car agency or another carrier becomes necessary. Additionally, your car insurance policy limits are too low for the state you are renting a car in or even for the cost of the vehicle you are renting. In that case, it may be prudent to purchase additional rental car insurance. If your vehicle is older, your auto insurance likely has lower limits than if you had a newer vehicle, so if you rent a new vehicle, your coverage may need to be higher to cover the potential cost of an accident.
Some auto policies have exclusions or limitations for rental vehicles. This means that parts of your auto coverage will only partially cover rental cars, leading to gaps in coverage. In this case, purchasing additional rental car insurance coverage can fill in these gaps. Additionally, it gives you peace of mind on the road.
Before you rent a vehicle, reach out to your insurance agent and review the details of your policy. This will help you decide if your current coverage is enough or if you need to extend your coverage or purchase rental car insurance. If you’re in the market for a new auto insurance carrier, Masters Insurance is here for you. With over 27 years of experience, Masters Insurance is dedicated to connecting Indiana and Ohio residents with the right insurance company for their needs. Contact us today to learn how we can help you decipher your auto insurance and prepare for your next car rental experience!