A good question that comes up often is “Do I need to pay for the Rental Car Insurance that the rental company tries to sell me?”
Typically, if you have an auto Insured for Liability and Comp. and Collision, your coverage will extended to the Rental Car. However, the issue can lie in the fine print.
Beware of the Fine Print in the Rental Car Agreement
If you have accident with the rented vehicle, in addition to expecting vehicle repairs the Rental Car Company will also likely require you to pay:
- Loss of Use while the vehicle is being repaired (e.g. replace the income that would have been earned if there had been no accident) and possibly:
- Depreciation (since the vehicle value is now diminished due to the accident) and
The Personal Auto Policy is not designed to address any of these costs.
Rental Company Collision Damage Waiver (CDW)
For most of us weighing the cost of the Rental Company’s Insurance, the Collision Damage Waiver (CDW) vs. the risk, may come down to a coin toss. For those of us that want peace of mind while on vacation (since we can turn a wrecked car back in without additional involvement, other than a deductible) then paying for the CDW is the way to go.
Note a Common Exclusion of the CDW
If you do purchase their coverage, there may be an exclusion that will not provide coverage while using the vehicle off paved Streets/Roads/Lots (obviously designed to keep individuals from off-roading with the vehicle). But if you go to sporting events or if you have kids that travel for Soccer, Baseball, Softball etc. tournaments, often parking lot overflow will be directed to an open field. If you back into something or worse, someone, will you be covered? My guess is no, the rental company will likely exercise this exclusion. However if you have a well written full coverage auto policy you should be fine.
Potential Coverage with your Credit Card Company
In some cases, you may find that the bullet point items above are in fact covered by one of your Credit Card Companies. When you get a new card, it comes with the folded up multi-page pamphlet with small print that is a chore to read.
If coverage for something like loss of use for a Rental Car is provided - it will be spelled indicated in this section. If you are like me and did not retain this, call the company to verify. If you do have the coverage, make certain to rent the Car with this Card.
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It is important to note, this discussion pertains to the Personal Auto Policy Only (not Commercial Auto Policies) and rental of Private Passenger Vehicles only (e.g. not renting a U-Haul).
posted by: Dan Hebbeln