Once in a while, someone asks us if they have “auto rental coverage” on their auto policy. Before I can stop myself, I ask “do you mean auto rental coverage or coverage when renting an auto.” Ever notice when you’re looking for a short “yes” or “no” answer and you get a question instead? Does it make you want to scream? Sorry about that. Good insurance agents ask questions!
If your auto is damaged in an accident, you might need to rent a replacement auto while yours is being repaired. Auto rental coverage pays the auto rental company for your auto rental costs. Most auto insurance companies won’t provide auto rental coverage unless the auto is being insured for physical damage. Auto rental coverage is an optional item on the auto policy, so not everyone has this coverage.
So who is insuring the auto while you’re renting it? Time for another question! Is this a replacement auto (as in the above scenario) or a “vacation auto” you’re renting at the airport car rental counter?
Your auto policy will provide insurance coverage when renting an auto for the replacement auto. The coverage provided matches the best-insured auto on your policy. You might NOT have coverage when renting an auto in the vacation auto scenario. Also, the auto rental company might charge you for things that aren’t covered by your auto insurance policy, including loss of use of the auto you damaged (lost revenue while the auto is in for repairs) and the repaired auto’s loss of value. Differences exist between insurance companies in how they provide coverage for these items. You should check with your insurance agent on this to be sure how it works!
Purchasing the physical damage waiver from the auto rental company simplifies things as long as you don’t violate the terms of the waiver. The waiver makes the auto rental company responsible for damages to the rented auto. If you’re relying on your credit card company to cover all this, please read the contract because it may not work the way you’re expecting. Me? I always get the physical damage waiver. Don’t make assumptions – call your insurance agent!