Renting a Vehicle? Do you need to buy the auto insurance coverage from the rental car company when renting a vehicle?

Time To Talk Insurance

This Months Topic: Renting a Vehicle

 Do you need to buy the auto insurance coverage from the rental car company when renting a vehicle?

            As a licensed insurance agent I answer a large number of insurance coverage questions on a daily basis for my insured’s and potential clients. One of the more frequently asked question is “If I rent a vehicle from a rental car company and have an auto accident am I covered for Liability and physical Damage on my personal auto policy or do I have to buy the auto insurance from the rental car company?” My answer varies depending on the insurance coverage’s offered by their personal auto insurance company.

             You do not always have to buy the auto insurance from the rental car company because you may have the coverage already included in your personal auto policy or you can purchase Rental Automotive Gap Coverage from your personal auto insurance carrier. Many personal auto insurance carriers do have some form of Rental Automotive Gap Coverage that may be automatically included or that can be added to an existing auto policy for a very small fee. The auto insurance companies that have this coverage available have their own Rental Automotive Gap Coverage form and the product and coverage’s can vary.

            It is important to remember that all rental car companies have their own written rental agreements using a specific language in their contracts designed to protect their legal and financial interests. You may be personally liable for damages to the rental car or bodily injury to others if you do not have adequate insurance coverage. Most rental car companies have insurance you can purchase from them and this coverage may be limited and the cost very high. Always call your auto insurance agent and ask for a detailed explanation of coverage and make sure your insurance company’s rental coverage form is broad enough to cover diminished value, and loss of use. Also, have your insurance agent verify in writing that the coverage exists before you rent a car or travel. If you do have the rental car coverage included in your personal auto policy contract then keep a copy of these important documents with you when you travel in case you have an auto accident and have to show proof of insurance coverage.

            The Rental Automotive Gap Coverage offered by my insurance carrier Auto-Owners Insurance is among the best in the industry and provides coverage for the amount you are contractually liable under the terms of the rental car agreement. The coverage pays for diminished value of the rental vehicle, which is any real perceived reduction in market value of the vehicle, and includes coverage called loss of use. Loss of use - The rental car company can actually charge you for the days they are left without a vehicle to rent out to others because the vehicle is not available to rent out for the following reasons… the vehicle is being repaired, replaced, or in storage.   

            Remember, it is extremely important to call your local insurance agent and ask a few coverage questions before assuming you have this coverage automatically included in your policy. Some insurance company’s may cover the liability and physical damage coverage but more than likely will not have coverage for loss of use and rental auto gap unless you add to your policy.

Michael Carlisle, Insurance Agent

Carlisle Insurance Agency, Inc.