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10 very important questions that should be addressed before you drive away in your rented automobile

May 4, 2020

One of the most common questions posed to insurance agents is “Am I covered when I rent a car?” While this seems like a simple enough question, in truth, the answer might be “yes”, “no”, and “maybe.”

Here is a list of 10 very important questions that should be addressed before you drive away in your rented automobile:

  1. What type of vehicle are you renting? Your personal auto policy provides physical damage coverage for non-owned private passenger autos, pickups, and vans only! Larger vehicles, such as cargo trucks and motor homes may not be covered.
  2. Is the vehicle being used for business or pleasure? Depending on what version of the personal auto policy you have, there might not be coverage for a rented pickup or van which is used for business, such as a van rented to make a sales call on a client.
  3. Where will you be driving? The coverage territory of the typical personal auto policy is the United States, it’s territories and possessions, Puerto Rico, and Canada. That’s it! There is no coverage if you drive, say, from Texas into Mexico, or if you rent a vehicle in Europe. Some rental agreements are even more limited.
  4. How long will you be renting? Some policies restrict the amount of days during which coverage will be provided for a rental vehicle. Ask your agent!
  5. What is the daily rental charge? This is not how much you are paying to rent the car. This refers to how much the rental company can charge you each day if the car is damaged! The personal auto policy provides coverage for “direct and accidental” damage to a non-owned auto. But what about “indirect” costs? Many rental companies will charge loss-of-use, loss of turn-back value, administrative fees, attorneys costs, etc.
  6. Who will be driving? Most rental car companies limit the agreement to the renter and possibly the renter’s spouse. Additional drivers must be listed on the agreement to have permission to use the car. An unauthorized driver could void the rental agreement.
  7. Will the vehicle be rented in the name of a business or in a personal name? The name listed on the rental agreement will dictate whose insurance will apply. If the car is rented in a business name, the business auto coverage would respond.
  8. Are you familiar with the rental car agreements USE RESTRICTIONS? This is very important! Most rental agreements have a list of “use restrictions” Read them! Violating a use restrictions could void your rental agreement.
  9. Do you understand the importance of purchasing the rental car companies “Loss Damage Waiver”? The loss damage waiver, sometimes called the collision damage waiver, waives your responsibility for the “indirect” costs we discussed in #5 above. Your personal auto policy will by the direct physical damage to the vehicle, and the Loss Damage Waiver relieves you of being responsible for the indirect costs. The price for the waiver usually runs $20 - $25 per day.
  10. If relying on a credit card to provide coverage, do you understand the limitations? Many credit card companies offer coverage for rental vehicles, but this coverage could have limitations and restrictions. For example, violation of the rental agreements use restrictions could void the credit card coverage.

So you see, the answer to our question is truly “yes”, “no”, and “maybe”. Many variables can affect whether or not you have coverage for a rental vehicle. The best advice is to read your policy and talk to your Independent Insurance Agent, because sound insurance is sound financial planning 800-360-3000!

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