Insurance 101 Rental Car Coverage

What a great day! You just spent the last eight hours sitting on the beach watching the waves. You're all packed up and heading back to the hotel when BAM! The guy in front of you slams on his brakes. Okay, no need to worry. You've got insurance. But wait a second. This isn't your car. Does your insurance cover rental cars? Did you make the right decision on rental car insurance? The good news is most personal automobile policies extend coverage to rental vehicles, covering you for both collision and other than collision losses, also known as comprehensive, provided you have those coverages on at least one vehicle on your auto policy. Typically, your policy's comprehensive and collision coverages will extend to you and other members of your household who are operating a rental car. However, if you don't have full coverage on at least one vehicle on your personal auto policy, you may need to look into purchasing the rental company's Collision Damage Waiver, or CDW, which is offered at the time of rental. A CDW policy protects you from financial responsibility for theft or physical damage to the rental car while it's in your possession. A CDW does not, however, cover your personal liability for bodily injury or property damage. Some rental companies may include conditions and restrictions which can void the CDW under certain situations, like violating a traffic regulation, so be sure to understand the terms. Oftentimes, a CDW does not cover loss of use. This means that if the rental car is damaged while in your possession, you could be responsible for paying the daily rental fee until the car is returned to service. That could get expensive if the repair shop required three weeks to fix the damage. The good news is, if you have a personal auto policy, you might be covered for loss of use. Rates for a CDW vary depending on the type of coverage. Some rental companies may allow you to select smaller amounts of coverage for a reduced fee. If you have a credit card, your credit card company may also offer a free CDW coverage if the fee for your rental car is charged to that credit card. Generally, the coverage provided by your credit card tends to be excess over any other coverage that's in place, including your personal auto insurance coverage. This means coverage is only available after the limits of your other policies have been reached. Call your credit card company before you rent to find out if they offer a free CDW. The next time you start planning your getaway, be sure to keep these helpful tips in mind so that you can decide the best way to handle insurance coverage on your rental car. Ask the rental car company about their terms ahead of time so you know your financial responsibility in the event of a loss. Be sure to inspect the vehicle before leaving the lot and know any damage in your rental agreement so you're not stuck paying for someone else's mistake. If you prefer to rely on your own personal insurance policy as coverage, carry a copy of it with you on your trip, both as proof of insurance and as a handy source of the terms of coverage. Most importantly, contact your independent insurance agent. They can guide you in making sure your rental vehicle is properly insured so you can travel with peace of mind.