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Understanding Car Rental Insurance

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How much do you know about damage waivers? Physical damage waivers? If you’re like most people, probably not that much. However, when renting a car, it’s these sorts of questions that the person behind the counter will be asking you, along with signing your name to show that you understood and agreed.

How do you know if you’re covered for car rentals?

For most people with auto insurance, they will be covered with a rental car, but the extent of that coverage will vary a lot between the various companies. If you are unsure about your coverage, but you have a local agent, your best course of action is to just call your agent and have them explain your policy to you. For most other nationwide insurers, they have 24 hour call centers, where you can have the person look up your policy information and they can tell you if your coverage extends to rental cars.

There are a lot of caveats though as many insurers won’t cover ‘long-term’ rentals, which are generally vehicles that are being rented for a month or longer. Similarly, many insurers won’t cover rentals for ‘business use.’ Business use is a category that most insurers ask you to specify when getting insurance.

The other options generally being to use the car for commuting or joyriding, and it constitutes using your vehicles for deliveries, visiting clients, or going to different job sites. The ‘long-term’ and ‘business use’ restrictions can be a problem for a lot of travelers because most people rent cars when traveling, and most people travel for either vacations or business.

The other option you have to find out about your coverage is, if you booked your rental car with a credit card, to call the credit card company. Since you’ll almost certainly be paying for your rental with a credit card, it can be as easy as calling the customer support phone number on the back of your card to find out if you have coverage. Most cards will have some kind of coverage for car rentals, but certain cards like American Express are known for it.

What types of coverage do I still need?

When you get to the counter of the rental car agency, they are going to offer you a lot of different options for insurance. For them, this is one of the areas where they make the most money so they may try to push this on you pretty hard. The best thing you can do is be prepared before you show up to the counter and to already know what types of insurance coverage you need.

The basic rule is to make sure that you have each of these areas covered, but to avoid duplicating coverage where possible as it will save you some money.

The common types of rental coverage are:

1. Loss Damage Waiver, also known as a collision damage waiver, which covers the car against being stolen or damaged. However, if you have auto insurance you may already have this. Similarly, you may want to look at the rental companies policies because many companies charge additional fees in the event of an accident. These fees can sometimes come outside of your existing auto insurance policy and can only be mitigated by getting the rental company’s insurance.

2. Personal Accident Insurance, also known as liability insurance, which pays for injuries to your or your passengers, along with any charges resulting from you being sued as part of an accident. Like the collision damage waiver, this too may be included in your existing auto insurance policy.

3. Additional Liability Insurance, covers you if you injure someone or their property. It comes as an extension to your existing liability coverage.

4. Personal Affects Insurance, which covers things that may be stolen from your car. However, if you have renters or home insurance, you may already be covered.

What else?

If you don’t own a car but do travel a lot, you may want to consider getting Non-Owners Liability Insurance, which covers you in cars that you don’t own. This applies to rental cars, as well as borrowing a friend’s car.

Finally, there may be a credit check required as part of the car rental process, and most companies will require you to be 25 years of age or older.

Jason Traff is the Founder of Leaky.com, an insurance comparison site that has given over 1.2 million insurance estimates and saved its users over $16 million and 5 years of time that would have otherwise been spent shopping for auto insurance. They specialize in auto insurance reviews and business insurance policies.

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