Auto Insurance and Car Rental

Sometimes, vehicle risks fall into their own special category, which you probably don’t think much about until the time comes and something happens. One of these cases is car rental. You probably think very little of what you may or may not be liable for when renting a car, relying either on your personal auto insurance policy or on the one the car rental company issues. However, it is worth taking a closer look to make sure you understand exactly what you may be liable for.

When you rent a car, you may not realize that you can be subject to certain risks that your personal auto insurance policy does not cover. You will be liable for a number of things when renting a car such as:

-          Direct liability for any injuries or damages you cause while driving the rental vehicle;

-          You are also liable for any damage that the car sustains as a result of bad driving;

-          Highly important is the fact that you will also be responsible for any damage to the car, even if you did not cause it. This is where it pays to read the fine print, because when you sign the contract you agree to be responsible for any damage the car may sustain;

-          You will also be liable for any revenue loss the company incurs as a result of the vehicle being unavailable while it is being repaired.

Your personal auto insurance policy will cover you for any injuries or damages you cause while driving up to the liability limit you have taken out. In the case of damage to the car, you are only covered if your policy includes collision and comprehensive coverage for at least one of the vehicles insured under the same policy. If your policy doesn’t include these then you should consider buying the collision-damage waiver coverage straight from the car rental company. The situation is similar for damage caused to the car that is not your fault but you will have to check with your auto insurance company as well as the car rental agency to determine exactly how your policy applies because regulations vary from state to state.

For revenue that the car rental agency loses for the duration your auto insurance policy may cover a part of it, usually up to $50 per day, if you have loss-of-use coverage on one of the vehicles registered on the policy. You can also choose to by the coverage straight from the rental agency however, keep in mind that courts have ruled that rental agencies can only charge you for lost revenues if they have no other vehicles available for rent.

The coverage you can buy direct from the rental car company can be quite expensive, even if it doesn’t seem so, as it is around $10 per day. But multiply that by 365 days per year and suddenly you are looking at a huge $3,650 per year, compared to $500 for collision and comprehensive coverage on your personal auto insurance policy. You should also read the policy very carefully because often they are so full of restrictions that you may end up owing a lot of money because of a silly mistake. For example, unlisted drivers are excluded from the policy and you could end up liable for all the damages even after paying for the coverage just because you forgot to list your wife as a driver.

Of course, even if you do have a good personal auto insurance policy it may be worth taking out the extra coverage if you want to protect your rates, because if you file a claim for damage to a rental car your rates can go up by as much as 20 – 25%. If you already have a bad record then you may as well kiss your policy good-bye as chances are that your insurance provider will cancel it.