Tetrault Insurance Agency

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When Do You Need Rental Car Insurance?

You may already be covered if…

  •  Your current Auto Policy has comprehensive and/or collision coverage
    • Because coverage varies from insurer to insurer, ask your insurance agent to see what extends to a rental vehicle
  • The credit card you use to pay for the rental provides coverage
    • Be sure to call Customer Service and ask whether they cover ‘loss of use’ or other fees, so you can assess your exposure
  • One of the above is true AND you are traveling in the United States, its territories, or Canada

Here’s what experts advise when you are behind the wheel of a non-owned vehicle:

  1. Check your Auto Policy first
    Typically, your auto policy will extend to a rental vehicle in Canada, the United States and its territories, but is limited to the coverage you have on your private vehicle and, depending on the individual circumstances of a claim, subject to a deductible.For example, if you don’t have comprehensive and/or collision coverage on your private vehicle, then this will not be extended to a rental. In other words, it may not make sense to you to pay for collision for your older-model sedan, but just know that means you won’t have collision on a brand-new rental car either unless purchased as the rental agency. It is possible to purchase additional collision coverage for rental cars through your personal or business insurance, so it’s important to talk to your insurance agent if it’s something you think you may need.
  2. Your credit card may provide an insurance policy
    When you rent a car, you’ll be offered an expensive option at the counter to purchase rental car insurance to cover any damages. This rental car insurance is usually rather pricey – from $10 to $25 per day – and you may not need it. Many major credit card companies, if used to pay for the car rental, provide coverage to the card holder with no additional cost. But be sure before you bank on it. Some credit cards may limit their coverage, and not all credit card companies offer it. Call and check first, and you may be able to save on the additional cost of rental insurance.
  3. Your credit card policy and insurance policy may not cover fees over the cost of damage.
    When you call to check your credit card’s policy on covering rental car costs, ask specifically what they cover. Some credit card companies may cover any damages you incur on the rental car, but will not cover the cost of fees assessed by the rental car company. Fees can add up, too, so you don’t want to be left holding the bill.
  4. Out of Country? Out of Luck
    Auto policies do not extend to vehicles rented outside of Canada, the United States and its territories, so you might want to purchase the extra coverage from the rental agency for additional piece of mind. Indeed, many credit card companies will not cover you outside of the continent, so if you are planning to rent a car during your holiday excursions abroad, it becomes even more important to read the fine print.
  5. No Trucks Please
    The type of vehicle you rent will also affect your coverage. For example, in one customer’s case, neither their personal car insurance nor their credit card coverage would cover the rental of a moving van.  So if you do plan to rent a cargo van or pickup truck, find out first whether your personal or credit card policy will cover you.
  6. The Road Less Travelled
    Investopedia.com points out that some rental companies prohibit the use of their cars on unpaved roads: “If you do purchase a collision damage waiver or other rental car insurance, it will most likely be voided when you drive the car on a gravel, or otherwise unpaved, road.” Check before you decide to go off-roading.

All in all, it’s worth a call to your car insurance or credit card company before you say no to insurance at the rental counter. No one wants to pay for something they don’t need. But no one wants to be left on the hook for thousands of dollars either.

Attention Business Owners:

What is Hired Automobile Coverage?

Hired Auto Coverage can either supplement or replace a car rental agency’s liability coverage.  This coverage can be included in a commercial auto policy or a general liability policy.  But because Hired Auto insurance doesn’t cover physical damage to a rented vehicle, it still makes sense to purchase the rental agency’s physical damage coverage.

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