Understanding rental car coverage

Last updated: 6/24/2010 9:48:42 AM

So you’re taking a summer vacation and plan to rent a car. Do you need to buy the insurance offered by the rental company or are you covered by your auto insurance policy? It depends.

Rental car insurance can be confusing. You absolutely need insurance when you rent a car, but deciding whether you need to buy the coverage offered by the car rental company isn’t always clear. It depends on your personal auto policy coverage, where you are traveling, and why.

Check your coverage
First, contact your insurance company. Find out how much coverage you have. In some cases, the coverage and deductibles you have on your personal auto policy would apply to the rented vehicle, providing it’s for pleasure, not business, and you’re not traveling abroad. To be adequately covered in your rental, your existing policy should include liability, comprehensive, and collision coverage.

Next, check with your credit card company to see what insurance coverage they provide. Credit card coverages vary so make sure you understand what is covered and what you are responsible for in the event of a loss. If you don’t have adequate coverage through your auto insurance policy or credit card, you should purchase the insurance coverage offered by the rental company.

Coverage offered by rental car companies
Rental car companies typically offer these coverages:

Liability Coverage. If you have adequate liability coverage on your car, you may consider forgoing this additional insurance. Please consult your agent to confirm your coverage.
Personal Accident Insurance provides coverage to you and your passengers for medical bills, but may not be necessary if you are covered by health insurance or have adequate medical payments coverage under your auto policy.
Personal Effects Protection insures your personal belongings.
Collision Damage Waiver (CDW) relieves you of financial responsibility if your rental car is damaged or stolen. The waiver covers “loss of use”—the income a rental agency loses when the vehicle can’t be rented due to damages. It may also include “diminished value” protection to cover a claim for the reduced value of the vehicle after a loss. In most states, an auto insurance policy won’t cover these costs, so you should consider taking the added protection. Note: Rental car contracts may include language allowing them to charge your credit card for losses they incur.

If you have full auto coverage with WEA Trust Member Benefits, you will be covered to the limits of your policy if:

The rental car is for less than 30 days and the vehicle you rent is a substitute for a vehicle currently listed on your policy.
The rented vehicle is similar to the vehicle you own.
The rental car is driven in the U.S. or Canada and U.S. Territories.
When renting a moving truck or van, you should always get coverage through the rental company.
If you have Progressive® insurance, all drivers must be resident relatives and all must be listed on the rental agreement to be covered for losses.

Underwritten by WEA Property & Casualty Insurance Company.
Your written policy will specify applicable coverages and program features.

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