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The Truth About Rental Car Insurance

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If you’ve ever rented a car, then you know that moment when you are ready to check out and you debate whether or not to buy the extra car insurance. It is a moment of uncertainty when the agent is trying to convince you that this extra car insurance is a need and not a want. They are just doing their job, but you should know before you go that you have options.

What You Have
If you have a car, you have car insurance, right? If so, you may be in luck because your auto policy may provide coverage if you find yourself in an accident while in a rental car. In most scenarios, your auto policy may carry over and you will be covered the same way you would be if it were your own car, subject to policy-specific exclusions. If your rental car is stolen or damaged and you don’t carry comprehensive and collision, then you may be on your own covering the damages. Before you decide whether or not to purchase that extra coverage for your rental, check with your agent to see what your policy covers.

Another coverage option may be through your credit card company. Some credit card companies may pay for rental damage after your personal insurance company pays, subject to contract provisions. Your credit card company may even cover the cost of towing the rental vehicle. Although your credit card company may cover damages, these typically apply just to the rental vehicle and do not extend to another vehicle, bodily injury, property damage or theft. The coverage also depends on the type of card that you have. Check with your credit card company that you plan on using to rent the vehicle to see what coverage options they offer.

Loss Damage Waiver
Loss damage waiver (LDW) is typically the insurance rental companies offer when renting out one of their vehicles. This can also be called collision damage waiver (CDW). These are not actually insurance, they just are agreements that relieve the rentee of financial responsibility for the rented vehicle. The rental company may offer you additional liability coverage above what they already carry, which is usually the state minimum. This means that sometimes when you purchase the waiver through the rental company, you are purchasing something that is unnecessary, seeing as though your auto policy may actually cover more. This also goes for personal accident coverage. Check with the rental car company before you rent to see what your coverage options are.

When You Should Get Rental Coverage
If your auto policy only covers liability, then you may want to invest in the LDW to avoid a bigger problem in the event that damage or theft occurs to your rental vehicle. You may also want to consider purchasing LDW to cover out-of-commission fees and depreciation value in the event that you damage the rental vehicle. If the vehicle is damaged and needs to be repaired, then the rental company cannot make money off of the vehicle. Because of this, the company may charge you a fee to cover the time that the rental car is being repaired. Also, since many rental companies end up selling their vehicles, they may charge you for the depreciation of the vehicle due to it being in an accident. Neither of these are covered by your auto policy or the coverage your credit card company may provide.

In order to make an informed decision, be sure to speak with your agent to discuss what all your auto policy covers. Additionally, check with your rental company to see what their coverage options are. Weigh your options and then choose whether or not to purchase additional coverage for your rental car. There is no right or wrong answer, just an informed one.

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The Tennessee Department of Insurance has issued an emergency order requesting insurers take reasonable efforts assisting policyholders experiencing losses from the severe storms on December 10, 2021. We are suspending cancellations and non-renewals for non-payment in the state of Tennessee through February 8, 2022. When the order is lifted, any missed payments will be due and/or cancellations and non-renewals processed.

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