published Friday, July 29th, 2011

Inside Insurance: What to know about car rental insurance

You’re going on a trip and renting a vehicle makes more sense because it’s more economical than putting all those miles on the family car.

So there you are at the rental counter and you are asked if you want to purchase the rental car company’s insurance offerings for the vehicle, or if you want to waive them and use the protection offered by your auto insurance.

After all, if you have auto insurance on your personal vehicle it typically extends to any other vehicle you drive, right?

It’s time for a quick review. Do you have “full” coverage or have you dropped your collision coverage because your vehicle is older and has lots of miles on it? Do you carry on the state required minimum liability limits and nothing more?

If you have “full” liability coverage along with uninsured motorist, collision, and comprehensive (sometimes referred to as “other than collision”) coverages, you are likely to not may not need to purchase the insurance offerings from the rental agency,. If but if you have a “minimalist” approach to your personal auto insurance, though, you might think twice about purchasing the offered coverages.

Here’s why. Let’s say you are on your way to your vacation spot and you are using the more scenic back roads and a deer collides with your rented vehicle. If you don’t have comprehensive coverage on your personal vehicle, your insurance is not likely to pay for the damage to the rental car. That repair job will be billed to you.

Let’s say you are involved in a traffic crash while on your trip and the other driver was at fault, but that driver only carried state-required minimum limits liability coverage and the damage to your rented vehicle was more than the amount covered by the other driver. The rental company is likely to look to you to pay the difference to have the car repaired.

These are just two possible incidents that can, and do happen, when we drive a vehicle. The problem key for the rental car driver is to know what coverage is available on his or her personal insurance, including the policy deductible, because the coverage amounts and deductibles on one’s personal auto policy will have a great deal to do with whether that driver is personally responsible should he or she have a traffic mishap in a rented vehicle.

Rental car insurance offers four coverages that include loss damage waiver, also known as collision damage waiver. It waives the renter of financial responsibility if the rental car is damaged or stolen.

Liability protection provides coverage from lawsuits in the event you are sued following an accident involving a rental car.

Personal accident insurance covers the driver and passengers in a rental vehicle for medical and ambulance bills incurred by injuries in a car crash.

Personal effects coverage provides insurance protection for the theft of items in your rented vehicle.

You may be covered for this issue if you have homeowners or renters insurance that includes off-premises theft coverage.

The bottom line for potential vehicle renters is to first contact your insurance agent or company before renting a vehicle to understand what coverages you have personally, and what coverages, if any, you may decide to purchase from the rental agency.

David Colmans is the executive director of the Georgia Insurance Information Service. Contact him at (770) 565-3806 or by email at dcolmans@giis.org.

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July 29, 2011 at 11:08 p.m.
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