Does My Policy Cover Rental Cars?

This is a common question that gets asked daily at car rental counters across the country. Naturally, the person behind the counter at the car rental company will not be able to give you a definitive answer because policies differ all across the country and some policies do cover rental cars - most do, in fact - and some do not. Choosing not to answer the question provides another benefit to the car rental company in that it enables them to try to sweet-talk customers into being safe rather than sorry and opting to buy their insurance coverage which adds more to the price of the rental.

Even though most car insurance companies do cover their drivers when they are in a rental car, you may want to consider the cost of the extra insurance offered by the rental company for a variety of reasons:

• Peace of mind: Taking the damage waiver or optional insurance offered by the car rental company gives a peace of mind you might not have if you are relying on your own auto insurance policy in the event of an accident. Think about it: would you rather get into an accident and shrug your shoulders regarding the damage since it's not your car and not your policy, or have to deal with the stress and worry and paperwork and issues of getting your own insurance company to pay for the damage you did to a car you'll never see again?
• No deductible: Many of the damage waivers offered at car rental counters come with no deductible. That means that if you do get into an accident or damage the car somehow, you pay zero out of pocket for repairs. This is not likely the case with your own policy. If you scrape the car or have a fender bender, your own insurance company will demand that you pay the deductible - $500 for most insurance policies - before they'll lay down a dime to help repair the damage. Depending on your accident, you may wind up paying $499 out of pocket because you were confident and cocky that your insurance would cover you. Well, it probably will...after you cough up your share first.
• Keep your insurance low: Just like having an accident in your own car, reporting damage to a rental that the car insurance company has to pay for is likely to raise your rates and count against you. On the other hand, if you take the waiver offered by the car insurance company and get into a scrape, your insurance company isn't going to have to pay a dime, and therefore you won't have to keep paying for the mistake by way of increased premiums years after the accident has happened.

If you make the choice at the counter to rely on your own insurance coverage, make sure you know your policy well first. Certain restrictions or exclusions may apply such as the age of the person driving the vehicle, and what the vehicle is being rented for. It is not uncommon for insurance policies to not cover rentals that are being used for company or business purposes – expecting your company’s insurance policy to pick up the tab instead.