Auto Rental Companies And Your Insurance Deductible: What's The Link?

When renting a car, you'll likely be asked about your insurance deductible. This is because rental car companies usually offer insurance coverage to their customers, which can protect them from financial liability in the event of an accident or damage to the rental car. This additional coverage is not mandatory, but it can provide peace of mind and protect you from unexpected costs.

Your existing car insurance policy may already provide adequate coverage for rental cars used for personal travel, but it's important to confirm the details of your policy before assuming you're fully covered. Basic auto insurance policies typically include liability insurance and any other coverages required by state law. Full-coverage policies often include add-ons like collision and comprehensive insurance, which protect your vehicle in the event of a collision or damage from non-collision incidents.

When considering whether to purchase rental car insurance, it's essential to understand the types of coverage you already have and any gaps that may exist. For example, if you only have liability insurance, your personal policy might not cover damage to the rental car. In this case, purchasing a loss damage waiver (LDW) from the rental company could be a wise decision.

Additionally, if you want to avoid paying a deductible or prefer not to file a claim through your personal policy, buying rental car insurance may be a good option. On the other hand, if your credit card offers supplemental coverage or if you've purchased a standalone policy through a separate company, you may not need the rental company's insurance.

Before your next trip, it's a good idea to review your auto insurance policy and understand your coverage limits to make an informed decision about whether to purchase rental car insurance.

To cover damage to the rental car

Auto rental companies ask about your insurance deductible to ensure they can recoup the costs of any damage to the rental car. If you don't have insurance, or your insurance doesn't cover rental cars, then you will be asked to purchase rental car insurance from the rental company. This is because, in the event of an accident, you could be left to pay thousands in repair costs.

If you already have auto insurance, it's likely that this will cover you for driving a rental car, as long as you're driving for personal purposes. However, you will still be responsible for your deductible, and filing a claim on your auto insurance policy could raise your premium. If you don't have auto insurance, or you're renting a luxury vehicle that your insurer won't cover, you can purchase a loss-damage waiver (LDW) from the rental company. This waives your financial responsibility for the rental car if it's lost or damaged, as long as you abide by your rental agreement.

If you have only the minimum level of auto insurance required by your state, you may want to consider purchasing additional coverage from the rental company. State minimums typically have low liability limits, so without sufficient coverage, you could be left with a large bill after a crash.

If you're travelling outside of your insurer's coverage territory, you may not be covered. Most US insurers extend coverage to anywhere in the US and Canada, but standard auto policies won't apply when travelling to Mexico or abroad. In this case, you may want to purchase rental car insurance from the rental company, or a standalone policy from a third-party insurer.

To cover damage to another vehicle

When renting a car, you will likely be asked about purchasing rental car insurance. This is because, in the event of an accident, you could be responsible for significant expenses if you don't have adequate insurance coverage.

Rental car insurance is not the same as rental car reimbursement coverage, which is a standard add-on policy offered by most insurance companies that covers the cost of a rental car if your vehicle is being repaired as part of a claim.

If you already have car insurance, your policy will typically extend to a rental car with the same coverage you have on your primary vehicle. This includes liability insurance, which covers injuries and property damage you accidentally cause to others.

However, if you only have liability insurance, your personal car insurance won't cover damage to the rental car. In this case, you can purchase a loss damage waiver (LDW) or collision damage waiver (CDW) from the rental company. These waivers release you from financial responsibility if your rental car is damaged or stolen. The LDW also covers theft of the rental car, while the CDW does not.

Additionally, if you have a high deductible on your personal car insurance, you may want to consider purchasing rental car insurance to avoid having to pay a large sum out of pocket in the event of an accident.

When deciding whether to purchase rental car insurance, it's important to review your existing coverage and understand the terms of your rental agreement. Contact your insurance agent or company to confirm what coverage will extend to your rental car. By doing so, you can make an informed decision and avoid unnecessary expenses.

To cover damage to personal belongings

When renting a car, you may be asked about your insurance deductible. This is because your rental car is typically covered by your personal auto insurance policy, which includes your deductible. If you get into an accident in your rental car, you will have to pay your deductible, just as you would with your regular car.

Personal items stolen from a rental car are often covered by your homeowners or renters insurance policy. This means that if your laptop or luggage is stolen from a rental car, you can file a claim under your homeowners insurance policy. However, you will have to pay your insurance deductible for this claim.

It is important to note that some items may be excluded from coverage under your homeowners or renters insurance policy. For example, Hertz's personal effects coverage excludes items such as eyeglasses, contact lenses, and sunglasses.

Additionally, some credit cards offer rental car coverage as a benefit to cardholders. This coverage is typically secondary, meaning it will only pay out after your personal auto insurance policy. However, it can help cover the cost of repairing or replacing stolen or damaged personal belongings.

Before renting a car, it is a good idea to review your personal auto insurance policy, homeowners or renters insurance policy, and any applicable credit card benefits to understand what coverage you have for personal belongings in a rental car.

To cover medical expenses

Auto rental companies ask about your insurance deductible to cover medical expenses in the event of an accident. Personal injury protection (PIP) and medical payments coverage (MedPay) are types of insurance that cover medical expenses for the driver and their passengers if they get injured while driving a rental car. This can include medical bills, lost wages, and replacement services for tasks the injured person is unable to perform, such as house cleaning and childcare.

In the US, liability insurance is required by law and covers injuries and property damage caused to others. This type of insurance will cover medical expenses when the policyholder is at fault in an accident and passengers in the other car are injured. However, it is important to note that liability insurance may not cover medical expenses for the policyholder themselves. This is where PIP and MedPay come in.

While PIP and MedPay are not available in all states, they can provide valuable coverage for medical expenses in the event of an accident. MedPay is typically sold in small amounts ranging from $1,000 to $5,000. On the other hand, PIP can provide more comprehensive coverage, including lost wages and replacement services.

When renting a car, it is important to understand the different types of insurance coverage available and how they can protect you in the event of an accident. By asking about your insurance deductible, auto rental companies can ensure that you have adequate coverage for medical expenses and provide additional coverage options if needed.

To cover loss of use fees

Auto rental companies ask about your insurance deductible to cover themselves for loss of use fees. When a rental car is damaged, it needs to be repaired, and during that time, the company cannot rent out the car to other customers. Loss of use fees are charged to cover the revenue forfeited while the car is in the shop.

These fees can add up to large sums, especially since the cost of rental cars has soared due to the car shortage. In addition, the pandemic has caused longer waiting times for repairs, as many auto shops are backed up. As a result, loss of use fees can easily amount to thousands of dollars.

It is important to note that loss of use fees are not always covered by personal auto insurance or credit card protection, so it is advisable to check with your insurance company to confirm your coverage. Some credit cards, such as Visa, offer secondary coverage for loss of use fees, which means they will cover the fees after your auto insurance deductible has been met.

To avoid being charged for loss of use fees, you can purchase a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) from the rental company. However, these options can be pricey and may not be the most cost-effective solution.

If you are involved in an accident with a rental car and are faced with loss of use fees, there are a few strategies you can use to fight these charges:

• Enlist the help of your insurance company, as they often take a tough stance against junk fees and can pressure the rental company to drop or reduce the fee.
• Demand documentation from the rental company to prove that the car would have been rented out during the repair period. If they cannot provide sufficient evidence, you will have a strong case in a credit card dispute.
• Threaten to sue the rental company, especially if you are renting in a state that does not allow loss of use fees, such as New York or Wisconsin.

Frequently asked questions