First of all, most U.S. drivers already carry auto insurance which will provide full or partial protection while driving a rental car (within certain dollar limits and coverage only for rentals within the United States and, sometimes, Canada). Some insurance policies only cover cars rented while your own car is being repaired, while most do not cover certain types of vehicles, like luxury cars or vans. Check your own personal policy for these limitations and exclusions.

Even with these limitations, your personal auto insurance will be the primary source of coverage if you have an accident or suffer injury while driving a rental car. Other types of coverage, such as credit card policies and the rental company’s optional insurance offered at the time of the booking, will be subrogated. This means it will not apply until you have reached the maximum of your own auto insurance coverage. Also, be aware that your personal auto insurance rates may increase if you file a claim for damaging a rental car.

Some states have legislature in place requiring rental companies to inform you that their insurance coverage may duplicate your personal auto policy, though these laws do not specify how you must be notified. The best way for you to do is to talk directly with your auto insurance agent before you rent a car and ask the following questions.

What geographical area does my policy offer rental coverage in? (Generally speaking, auto policies cover the U.S. and Canada only.)

How much liability coverage do I currently have? (If you own an older car, for example, you may carry only the minimum amount of liability coverage that is required by the laws of your state, a level that may be insufficient to protect you against the risk of completely replacing a brand-new rental vehicle or, potentially even worse, paying an excessive personal injury claim.

How much is my deductible? (Are you willing to pay that amount out of pocket if you have to file a claim for damaging a rental car?)

Does my policy cover only the value of the vehicle(s) listed on my policy? (If so, you should compare that value to the replacement cost of the type of car you will be renting.)

Does my policy cover theft and collision damage? (Most U.S. drivers already carry collision coverage that can replace the protection sold by rental car companies.)

In the end, the decision of whether or not to purchase optional extra insurance from a car rental company is yours, of course. Consider well the value of the insurance against the cost and bear in mind the above information and make the decision with all the facts.

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Do not wait until you are in a quandary at the rental counter. Before your next business trip, find out if you are covered through your own automobile insurance policy or through your credit card company.

Business Use

Since the expense is for business use, take the coverage the rental agency offers for at least two reasons: 1) If you have an accident, your insurance carrier will not be aware of it and thus it will not affect your personal auto policy rates. 2) It is a deductible business expense whereas your personal auto policy is not.

Auto Insurance

Call your agent to find out what your auto insurance policy covers when you rent a car. To be properly covered in your rental, your existing policy must include liability, comprehensive and collision coverage for rental vehicles. Liability insurance covers you if you injure another person in an accident, and comprehensive and collision insurance cover the rental car if you are responsible for the damage.

Credit Cards

After you know what your auto policy covers, check with your credit card company. Some credit card companies offer collision and theft insurance when you use their card to pay for a rental, but this coverage is usually secondary to your personal auto policy. Significant restrictions may apply: For example, the card company may require that you decline the rental agency’s collision damage waiver a provision of your rental agreement that limits your liability for damages to the car.
Remember, a credit card will only cover damage to the car, not liability claims against you. That means your credit card will not protect you if you injure others or destroy property. In addition, this coverage might exclude business use or be limited to a certain period of time and geographic area.

Rental Insurance

If you do not have adequate coverage through your auto insurance policy or credit card, you should purchase coverage. The most misunderstood part of rental insurance is the collision damage waiver. A collision damage waiver isn’t really insurance; instead, it is a guarantee that the rental company will pay for certain damages. Rental agencies offer collision damage waivers or loss damage waivers for about $14 to $20 per day. If you decline the collision damage waiver, you accept responsibility for all damages.

The collision damage waiver also covers “loss of use” the money a rental agency loses when the vehicle cannot be rented due to damages. In most states, an automobile insurance policy will not cover this cost and you could find yourself personally responsible for it.

In addition, when you damage a rental car, some agencies will expect you to pay up front for repairs or replacement costs. This means the money comes from your pocket and you must get reimbursed by your auto insurance company. The collision damage waiver protects you from these up-front costs.

In addition to the collision damage waiver, most rental agencies offer:

Supplementary liability insurance, which acts as secondary coverage to your personal policy

Primary liability insurance for drivers who don’t have auto insurance policies or don’t want to use them

Personal accident insurance

Personal effects protection that insures your belongings

So, ultimately, it depends on your situation, but do carefully consider all of these possibilities and most of all, make sure you are covered!

Matt McWilliams is one of the co-founders of HometownQuotes.Com, an online insurance quotes web site. He is originally from Pinebluff, NC and attended Middle Tennessee State University. He is considered an expert in the field of online insurance shopping and finding new ways to help consumers save money on their insurance. For more information visit http://www.hometownquotes.com

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When someone rents a car, the automobile rental companies hold the renter accountable under the rental agreement for damage to their car. They offer a Damage Waiver at an extra cost. This Damage Waiver is not insurance, but a contractual agreement between the renter and rental company. If a waiver is not purchased, it is important to review your own automobile policy to determine if any extension of coverage applies. Also, establish how the liability coverage afforded by your policy applies in the event you are at fault in an accident with the rented vehicle. In California, you are required to have auto insurance regardless of whether you are driving your own car or if you are renting one.

Rental car agencies do provide wide range of auto insurance coverage and it would not be prudent to blindly select rental car insurance as every policy offers its individual advantages under particular situations. You should examine each policy so offered and judge it against the requirements you have. It would be prudent to discuss the policy with the car rental agent, rather than just read the summary over the website.

Sometimes you are not required to purchase any car rental insurance because you are already covered by your car insurance. Usually, your coverage does remain the same with a rented car as it would if you would be driving your own vehicle. Also, you could be covered by auto insurance coverage under your credit cards. You should check with your credit card company about the coverage to which you are entitled.

Before you rent a vehicle, check the financial and insurance obligation you will face, and find out how these would be covered by your own auto insurance. In case you do need to exercise your insurance policy and realize that certain aspect is not currently covered, you should check if it would be covered under other insurance policies.

California Auto Insurance provides detailed information about California auto insurance, California auto insurance companies, California auto insurance comparisons, and more. California Auto Insurance is affiliated with Cheap Sports Car Insurance.

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