Going to rent a car while on vacation? Do you need to buy the rental car company’s expensive insurance?
To be safe, yes. While your liability, collision and comprehensive coverage generally carry over to rented vehicles, there are a few “gotchas” that you need to consider.
The rental agreement makes you responsible for many other things than just direct damage to their car including items you are not "legally" responsible for but that which you accept liability for via the contract/agreement. While there are several areas of concern and potential gaps in protection, let’s focus on these three:
Loss of Rental Income. You damage the rental car and take it out of service. The contract says you are responsible not just for repairing their car, but also their lost income. You may have rental reimbursement on your personal policy, but is the daily limit and length of time adequate? The rental company may be in no hurry to get the car repaired within the “reasonable period” stipulated by your policy. That makes you liable for the difference and it can add up very quickly.
Diminution of Value. What’s that? Let’s say you rent a car worth $30,000 and have an accident while driving it. Even though it will be repaired, it is now worth less than what it would have been had the accident not occurred. You may owe the difference depending on the jurisdiction. A standard auto policy doesn’t provide this sort of coverage and you could be responsible for several thousands of dollars with virtually no defense.
Additional Charges. If in the event a loss/claim you may be responsible for pre-determined storage fees, appraisals, claim adjustment expenses and unlimited administrative charges. If these charges are not considered "standard" incurred expenses you would be responsible for these. Again, these before mentioned exposures are created when you sign an agreement/contract with the rental agency as their agreements are written to favor them.
Always, always read any contract before you sign it. Every rental car company will have different provisions. It’s tedious, but necessary to protect yourself. Buy their coverage for your financial peace of mind.
Exceptions to the above – Metlife Auto & Home as well as Auto-Owners when the optional "Personal Automobile Plus" endorsement is carried.