We recently took a family trip out to Colorado and had an epic time exploring the mountains in our rented Ford Expedition. While creating the reservation, my wife Cati asked the same question I’m often asked by my clients prior to their upcoming trips, “Do we need to add on the rental company’s auto coverage?” Which led me to explain how physical damage and liability coverages on personal auto policies can extend to a rented vehicle.
The simple answer is yes, it can, within the coverage territory (typically the US and Canada), and ONLY if you have the proper existing coverage. If you are traveling outside of the US or Canada, you will need to obtain the rental car damage waiver and liability protection offered.
For domestic travel, like our trip to Colorado, using your existing policy’s comprehensive, collision, and liability insurance is an option. I have the mindset of obtaining the damage waiver from the rental car company. Many may ask, Why? Here are some things to consider:
First, your personal auto policy is designed to protect you in most typical scenarios of everyday driving, and may suitably protect you for incidental use of a car that is not your own, such as a rental car. In the event of damage to your rental vehicle, the rental car company may determine you are financially responsible for charges that your personal auto policy is not designed to cover. After vacation, the last thing we wanted to do was deal with an insurance claim and/or charges not covered from damage.
Second, many credit card companies offer rental car insurance if you pay the rental fee using their card. It’s important to note that rental car coverage from a credit card company typically only covers physical damage. So you will still need separate liability coverage, and it may not cover any fees charged by the rental car company.
Third, consider the deductible amount on your auto policy. If you become responsible for minor damage to the rental vehicle, would it make sense to file a claim?
Last, knowing what your auto liability limits are and understanding how they work will allow you to finalize your plans. Most states have required minimum liability limits. Rental car companies are required by law to offer those minimum limits, but minimum limits often don’t offer enough protection. If you have personal auto insurance, and have opted for higher liability limits, you’ll be better protected, and there is no need for the liability coverage offered by the rental car company.
If you are going to be traveling often, we can work to create a rental car risk management plan. That plan is going to look different for everyone. It’s all about evaluating, seeking guidance when needed, and determining what you feel comfortable moving forward with.
When thinking about a rental car risk management plan, if you have more questions than answers, let’s get together and discuss. I am here as your insurance advisor and will help you work out a plan that will give you peace of mind while you’re on vacation.
