Rental insurance: Better to be safe ...
You have started your vacation and arrived at your destination after a relaxing flight.
You walk up to the rental car counter to pick up your car, and the agent asks if you want the optional insurance through the rental company.
At $20 per day, the coverage seems a little costly, and you remember hearing that your personal auto insurance provides sufficient coverage. So you pass.
Yet, as you drive away from the airport you wonder what the “right” answer to the question really is. Of course, any good lawyer will tell you “It depends.”
Here are the facts.
If you take the rental car company’s insurance, chances are you are paying to alleviate any problems should the car be damaged in an accident. The answer is conditional because you must still be operating the vehicle lawfully. Many, if not most, insurance contracts have clauses that provide that the coverage will not protect you if you are driving recklessly, or under the influence of alcohol or drugs.
Assuming those factors are not at issue, the rental company’s insurance provides a comfortable layer of protection for a price.
Another benefit to the rental company’s insurance is that it likely includes “loss of use” insurance. This “insurance” is actually a waiver from the rental car company that it will not require you to pay for the loss of rental profit for the time the rental car is being repaired.
It is true that your own auto insurance might protect you when renting a vehicle or borrowing someone else’s. You should check with your insurance company to make sure it offers this coverage. However, your own deductibles and policy exclusions will apply. If you have a high deductible policy, and the car is damaged, you will still be responsible for the portion of the damage within your deductible.
Another problem is the failure to have the right coverage for the damage incurred. For example, assume you own a hoopty and carry no comprehensive insurance (insurance that pays for damage to your car as opposed to liability coverage that pays for the damage you cause to someone else's vehicle). If you rent your dream Mercedes and end up totaling it, your insurance will not pay for the damage to the rented vehicle, only for damage you cause to others. You will end up being responsible to the rental company for the damage to the rental car.
Even if you have comprehensive insurance, you might run into trouble if the rental car is worth more than your own car. Check with your insurance carrier to determine if it will pay the difference between the value of your car and the amount of the damage to the rental car.
It is important to remember that credit cards frequently provide coverage for damage to the rental car as part of their services. This is a valuable benefit, and you should check with your credit card company to see if it provides that coverage.
Coverage through a credit card is usually limited, covering damage to the rental car, and does not usually provide liability coverage for damage to other persons or vehicles or any medical coverage. It also might not cover expensive vehicles, such as SUVs or high-end rentals.
Next time you walk up to that rental counter, make sure you have adequate insurance coverage before you decline coverage offered by the rental car company. Review your car insurance coverage with your carrier and shop for the best coverage for the least amount that you can find. Check with your credit card companies, find one that has rental car insurance automatically built in, and make sure you use that card when you rent a car.
Finally, if you are in doubt about whether your insurance is adequate, accept at least the loss damage waiver and collision damage insurance offered by the rental car company. It might offer peace of mind and save you a lot of hassles and expense, not to mention a trip to the Legal Assistance Office.
Lt. Col. Todd Liebman is an Army reservist who worked at the Stuttgart Law Center. He has returned to his home in Wisconsin.
