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 The following article is a reprint from the June 2017 edition of our newsletter: Insurance Insights

 Summer is here. So much to look forward to; cookouts, family gatherings,...and vacations! As great as vacations can be, they aren't cheap (do kids eat or what?). Especially if you need to rent a vehicle during your trip. It's amazing how fast a daily rental rate of $29.99 per day turns into $69.99 when you start adding in taxes, surcharges, and fees. So, the last thing you want to do is buy their insurance, right?

Are rentals covered by your auto insurance policy? This is one of the most common questions we get during the summer.

In general, most insurance policies will insure a temporary rental vehicle for a covered loss in the same manner as your insured vehicles. In other words, the policy language will apply to the private passenger rental vehicle the same way it does to your scheduled vehicles.

Please be careful here.  These policies don't "magically" add coverage that isn't there already.  For instance, if you don't have a vehicle with physical damage (comprehensive and collision) coverage, then you policy won't provide it to the rental car.  In this case, you must definitely buy it from the rental company.

I'm also assuming the rental is for personal reasons.  Call us first if the rental vehicle is being signed for and paid for by a business, or you're using it for your business and your current vehicle is no rated as "business use".

Okay, so now we know (generally) how your insurance policy treats a rental car, but is that good enough for the rental company?  Maybe...not so much.

The rental car company will offer you their Collision Damage Waiver (CDW). This isn't insurance.  It's simply an endorsement which waives the contract provision that makes you liable for:

  • Losing or damaging the vehicle while you are renting it, whether or not it's your fault.
  • The cost to repair or replace the rented vehicle.
  • The loss of income to the rental company while the rental vehicle is being repaired. 

Your personal auto comprehensive and collision coverage typically only handles the cost of damage or replacing (up to the actual cash value) the vehicle.  It doesn't cover the loss-of -income provision. 

And...one more thing.  Even if your insurance policy covers the actual loss, the rental company may come back and charge you for "diminished value" of the vehicle, because it is not worth as much as it was before the accident.

Yikes! So, should you buy their coverage or not?  Well, if money is no object; buy their coverage. Nice and simple. But, again, if your kids eat like mine...you might want to call us first.  We may have just the solution for this problem. 

Some of the companies we represent offer endorsements which will cover loss-of-income, and "diminution of value".  The cost can be as low as $30 per year. 

These endorsements may even include reimbursement of travel expenses you didn't expect because of the loss. We can check to see if your company has this option, and give you the peace of mind you deserve.

NOTE: I want to make a distinction. I'm not talking about moving vans, or trucks. Insurance policy language can vary in regards to them. Some carriers will cover a moving van as long as it isn't a double axle truck, yet other won't even insure a van if there is a partition between the front seat and the cargo area.  When it comes to these, always, ALWAYS, call first. 

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