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. 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. Wreck their car and you will also be responsible for towing, labor and storage fees, appraisals, claim adjustment expenses and unlimited administrative charges. Again, there is no coverage under your policy for these costs.
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.
Exception – Metlife Auto & Home as well as Auto-Owners when the optional "Personal Automobile Plus" endorsement is carried.