One of the most common questions we get is “should I buy insurance from the rental car company?” Unfortunately, there is no simple answer to this, but we will try to explain the options and provide some education and guidance.

Does my existing auto policy cover a rental vehicle?

Yes, with some exceptions. A rental vehicle is treated as a temporary replacement vehicle for your car. The same personal vehicle insurance limits and deductibles will apply to the rental vehicle. For example, if you have a $500 collision deductible, the same amount would apply if you were in an accident with the rental vehicle, just as if it were your own car. If you hit another vehicle and cause damage to another party, the same liability limits for your personal auto insurance will also apply.

What are some “gotcha’s” in the rental car contract that would not be covered by any personal auto insurance policy?

Rental companies may hold the renter responsible for a “diminished value” fee when a rental car is damaged. This represents the decrease in the market value of a vehicle due to the accident. Also, with some types of damage, rental companies simply sell the damaged car for salvage. They then charge the lessee the difference between the market value on the day of the rental (“up front”) and the amount the car fetched at the salvage auction (“after”). Even if your personal insurance covers damage to a car, rental car companies may also pay the renter for the time the vehicle is not rented (loss of use).

What is a loss damage waiver (the thing they try to sell you at the counter)

The upsell that the person at the rental car counter hits you with is called Damage Loss or LDW. It is not insurance and is simply a contract that releases you from liability for certain damages (for a fee, of course). Upon waiver, the renter will not be responsible for any damage to the vehicle. He or she will not be charged for vehicle repairs, depreciation, before and after appraisals or loss of use. The renter may be released from any liability for damage to the vehicle if it has not been engaged in any prohibited use. All rental car waivers have a clause that voids the waiver if the renter is operating the vehicle improperly at the time of the accident. The downside of the loss damage waiver is that the cost can sometimes be as much as the rental car itself.

Would I not have coverage from my credit card company?

Only a few credit cards offer any coverage for a rental car, and even then, the coverage is generally nonexistent Primary Coverage. This means you have to use your auto insurance first before you claim anything from the credit card company. It’s not a great option and it’s generally misunderstood. Unless coverage is through a specific program like the one offered by American Express, it’s not a good idea to rely on this credit card benefit.

So should I take the “insurance” option the person at the counter is trying to sell me?

Our best recommendation is to confirm with your agent that your personal auto insurance limits will apply to a rental vehicle (this should with the exclusions we discussed). Evaluate the cost of giving up damage to see if it’s worth it to you on this trip. If you’re on a bucket list trip across the country, it might be worth it to not have to worry about filing a claim with your insurance company if there’s a problem or worrying about “gotcha’s” in the rental car contract. . that no personal auto policy would cover.

Flury-Hinderks Insurance is an Independent Insurance Agency located in Overland Park and is a trusted advisor to thousands of Johnson County families. Contact Flury-Hinderks Insurance today for a comprehensive insurance review.

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