Renting a Car? What You Need to Know About the Insurance
When you rent a car—either near home, across the country, or internationally—there are important rules to consider for each scenario. Rental coverage is also affected by the policy you hold on your own vehicle.
Your car rental contract will generally offer two insurance coverage options: liability and the loss damage waiver (LDW).
Liability Coverage
Liability coverage protects from lawsuits against you, or from property you damage (such as another vehicle). In most instances, if you rent a car anywhere in the U.S. or Canada, you are covered in the same way as the “best covered” car on your auto policy. This means that if you have full coverage on one car and liability only on another, the coverage applicable to the full coverage car will apply to your rental vehicle.
Loss Damage Waiver (LDW)
A loss damage waiver covers theft, fire, vandalism, flood, and collision damage to the car you rent, as well as loss of the car’s use to the rental company. Before renting a car, consult your credit card company, as many card issuers will cover this if you use their card to pay for the rental. If you do not purchase the LDW from the rental car company, you are still liable to pay the deductible and loss of use out of your own pocket. If your credit card company does not cover the cost of an LDW, we recommended that you purchase it to protect against all scenarios.
Other Things to Consider when Renting a Car:
If you rent a car for business purposes you will not be covered by your personal auto policy. You may be covered under your business’ insurance at least in part, but you will need to confirm with your commercial insurance agent. If you are working for yourself and have no insurance, you will need to purchase the insurance offered by the rental car company.
If you want someone from outside your household to drive the rental car, most auto insurers will not provide coverage and you must purchase liability insurance from the car rental company. Typically, household drivers (including your children who attend college and live in on-campus housing) who are listed on your policy are covered by your insurance and don’t require insurance from the rental car company.
If you rent a car outside of the U.S. or Canada, some car insurers will provide coverage at least in part. However, depending on the country in which you rent the car, you may be detained there until a claim is settled, and a U.S.-based insurer may not have resources there to allow the claim to be settled smoothly. To be safe, it makes sense to purchase insurance from the car rental company when abroad. If you cross borders while driving, assume you need to purchase the insurance from the car rental company.
Before You Go
Before renting a car, it’s important to find out what’s covered based on your travel destination, current policy, and insurance carrier regulations. Check your policy for rental coverage details or call your agent to be sure you are aware of all conditions. It could save you time, money, and headaches in the long run.
By Rocco Esposito
