Does my insurance cover me in a rental? Sorta.
This seems like a simple enough question but the answer can become complex. In signing a rental agreement, the renters agree to be responsible for the liability of the vehicle and to any damages caused if at fault for another person’s bodily injury or property.
A few things to note:
- Rentals may only be driven by named drivers on a policy AND application. Do not assume that spouses or children on policy are authorized to drive unless they are on both the rental application and policy.
- Rental car companies have their own insurance policies they will attempt to sell you. Understand where your risk starts and stops, compare to the premium offering, and insure accordingly. I will go over these options below.
- Insurance policies can have a limit in which their policies will extend to rentals. It is commonly 30 days. If you plan on renting a vehicle for longer than 30 days, the supplemental insurance offerings might be necessary at that point.
The ISO country-wide Personal auto policy (not all insurance companies follow this structure) does provide coverage for losses occurring in a rental car but it has limitations.
Bodily injury and Property Damage
One of the greatest risks arising out of operating a personal auto is bodily injury to other people and their property. While in the operation of a personal automobile vehicle, your bodily injury and property damage will extend to non-owned vehicles as long as it’s not for commercial use, not a commercial vehicle, in all 50 states, Canada, and the first 50 miles of the US Mexico border.
Some insurance companies like Safeco will extend coverage to their clients worldwide, but it would require a special endorsement. So before you head out to do a road trip across Europe, give your insurance agent a call.
Comprehensive and Collision to the rental vehicle
If you are in care custody and control over a rental vehicle, it is likely that you would be required to carry comprehensive/collision coverage or offer a bond to protect the assets you are renting.
Comprehensive and Collision protect the vehicle, which is why rental car companies want you to have it. If you carry a policy with just liability, they may require that you purchase the damage waiver.
Your insurance policy will likely only cover you in a rental vehicle if it falls under the definition of temporary substitute for “your covered auto”. (This is why there is a 30-day limit, as after that it becomes less temporary and more semi-permanent or long-term lease.)
SLI insurance
SLI insurance is supplemental liability insurance. According to Enterprise- Supplemental Liability Protection (SLP) is offered at the time of rental for an additional daily charge. If accepted, SLP provides the renter and authorized drivers with up to $300,000 combined single limit for third-party liability claims. This coverage is EXCESS to your current policy, which means that you must first have an insurance policy and those limits must be exhausted prior to this new policy helping out.
Considering that rental car companies will deny coverage if the damage is caused by racing or doing illegal activities, it seems to us that you will likely be operating this vehicle in the same way you would your own vehicle. If that is the case, your current insurance policies limits should match the liabilities and your lifestyle that you wish to protect against lawsuits.
This SUPPLEMENTAL LIABILITY insurance policy is like sprinkles on a cupcake. If you can to pay the additional $8-$16/day sure, just understand that it doesn’t prevent a claim on your policy.
LDW or CDW insurance
Most rental agreements require the rental to be returned in the same condition as it was loaned. I would highly suggest taking at least six to eight photos of the vehicle during the walk-around (Front, corners, and sides), and interior photos. Also, ensure that the rental employee is marking down any and all damages. I can’t tell you how many times an employee will say that this ding isn’t a big deal, and upon return, they will hold clients’ feet to the fire.
Loss damage waivers or collision damage waivers are tricky at best. Some contracts will pay for your insurance deductible to fix the vehicle. So should you carry a 2500 dollar deductible, this might be a good deal (unless the contract puts a cap on their liability). If you carry at 250 dollar deductible, and the waiver costs 50 dollars/day, it might not be a great deal for you.
Other waivers might allow for a certain dollar of damage to be waived. So if the damage is a dent or under a certain limit, they agree to not hold it against you since you paid for the waiver.
Credit card companies will often provide CDW or LDW coverage if you use your credit card to rent the vehicle. Be sure to discuss this benefit if your credit card provider.
Here is the one saving grace of a damage waiver-If you own a $20,000 vehicle and rent a $60,000 vehicle, some insurance policies will only pay for the limit in which your premiums are accounted for. Just because it’s a great opportunity, doesn’t make it a good deal. Consider the LDW/CDW offerings in this situation
Loss of use, Diminution of value,
Rental car companies will often attempt to recover lost revenue if the vehicle could not be rented during the duration in which the vehicle was in the shop. Many insurance policies do not have coverage against loss of use. Further, be sure that the rental car company can actually prove they lost revenue. Just because the vehicle was in the shop, it doesn’t mean that they weren’t sitting on 20 cars on their lot. Another supplementary demand that is often not covered would be the diminution of value. This topic is very complex as to the legality and value, but note most insurance policies will not cover this demand either.
Knowing where the buck stops are critical for clients and their insurance policies. Simply expecting these contracts to cover everything is asking for trouble.
Does my insurance pay for me to get a rental car? Sometimes
On the rare occasion, I will get the call from a client who is looking to get out of town but their vehicle doesn’t fit the bill. Sometimes older vehicles are not reliable or they need a minivan. Just know that the rental car provision on your policies is only for losses we cover. So should your vehicle be in the shop for a loss we covered, we will afford rental car reimbursement for a duration. If you’re going to Disney, and need a rental, this bill is on you.
