Does my auto insurance cover me in my rental car?

We are here today to ask one simple question. Does my auto insurance cover me in my rental car? This is a question we get asked most often as agents. Well this and "why do my rates keep going up?" Unfortunately, simple questions often give birth to complicated answers and the answer to the rental question is "It depends".  You (of course) do not want to take coverage that you do not need. Oh, and that smiling manager/employee who is gladly helping you gets bonuses (in some cases) for selling you that additional coverage.  But I digress.

The first thing to do is to check your own auto policy or call your agent. Does your insurance provide coverage for collision? What's your collision deductable?  Auto insurance is designed to be a flexible product that can move as you do. If you do have collision coverage then the coverage follows you to the rental car. If you lend your car to someone who is not insured then your coverage follows your car.  Also are you putting your payment on your credit card? Because then you might want to check with the credit card people, some cards provide additionalcoverage's when you are renting a car or traveling.

So if you get into an accident with that nice shiny new rental car, your collision coverage will pay to fix the car and you will be responsible for your deductable and a "loss of use" fee. Some states / Rental companies enforce this fee more than others do but in its simplest form it means this... I cannot rent this car while it is being fixed from your accident so I am going to charge you daily while it's in the shop.  It really is fair, but it's NOT covered by your auto insurance.  This is the piece a lot of agents miss when talking about this subject.  

So what else is and isn't covered?  Perhaps now would be a good time to see it from the rental car company's point of view. I took a moment to call my local Enterprise  location. As you can imagine being the #protectionpros affords us some contact with the local managers.  Farmers Insurance uses Enterprise almost exclusively and we get great rates. So if you have Farmers and need a rental car, I can usually get you a much better rate then you can get on your own.  Even though it's not needed for a covered accident. (Little money saving hint from your Uncle Barry)

I am  assured that while the location profitability is certainly watched, and the insurance sales plays a part in that profitability, there is no bonus or spiff for an Enterprise sales person/manager  to provide you with additional coverage's. They do this as a courtesy to their clients. So let's take a look at the coverage's rental car company’s offer and what they cover.  You notice I am carefully refraining from calling what they sell you, insurance. It really isn't, it's more like a loss waiver(s) since they mostly self insure.  IE: have deals with local body shops etc to get the dings & repairs fixed fast and inexpensively.

The first coverage they offer is Collision Damage Waiver (CDW)/Loss Damage Waiver-As mentioned above this is not insurance. It's a waiver that moves the fiscal responsibility of an accident from your shoulders and places it squarely in the lap of the car rental company. Some (if not most) of these waivers have clauses that also take care of the loss of use mentioned above. It pays to read the fine print anytime you are buying a contract.  Why would you take this coverage if you are already covered by your auto insurance? Well, some people do not want to have to pay a deductable, have a claim on their record or have their rates go up if they got into an accident with the rental car.  All possibilities that are alleviated by this damage waiver.

The second type of coverage offered is Personal Accident Insurance - This will cover medical expenses should you get into an accident.  Most people carry $5,000 or so "medical" on their auto insurance or adequate health insurance or both.  If so you can turn down this coverage.

Next we have Extended Liability Insurance. -This gives you a one million dollar temporary liability if you get into a crash with the rental car.  If you have adequate liability limits on your own car you can turn this down as well. Like any decision when it comes to insurance, it boils down to where you want to place the risk.  If you want to carry the risk if something like this happens, then you turn it down. If you want to have the rental car company carry this risk you take it and pay the fee. Is the risk worth the investment is the central question for both you and the insurance company. 

Lastly, they offer Personal Effects Coverage - much as the name implies this covers your things should they be stolen or get damaged in the rental car. Most Renters, Condo and Homeowners policies cover items off premise. Check your documents or check with your agent to make sure you’re covered for this loss. If you are, then you can turn down this coverage.

As with most insurance decisions the most valuable resource you can have in your corner is an experienced, knowledgeable and caring agent who will take the time to make sure you understand and have the facts to make an informed decision.  Should you take the optional coverage's? That's a personal decision based on your situation and the risk you want to incur. But two of three managers I spoke with for this blog claimed they do take the Damage waiver whenever they rent a car. Personally I was a road warrior for many years and never took the extra coverage.

While all states have different laws (we are based in Lombard Illinois), we will do what we can to answer your insurance questions, or direct you to the appropriate answers for your State of residence. Write us at bfidlow@farmersagent.com  or Tweet us using the hash tag #ProtectionPros. You can also follow us on Facebook. If all else fails we even have an old fashion land line. Which is 630-297-1407 We look forward to talking with you soon.

Building our agency one friend at a time,

Barry Fidlow