Rutt Insurance Blog: personal auto
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FRIDAY, APRIL 15, 2016
As winter has reluctantly said its final goodbye, and school bells will soon ring marking the last day of school, many Pennsylvania families are turning their thoughts to family vacations. Here are some frequent questions we get each year from families looking to rent a car on vacation.
Q: I'm going on vacation and plan to rent a car. I've been told my personal auto policy will cover the rental vehicle. Is this true?
A: The majority of auto insurance companies will extend coverage from your personal auto policy to a rental vehicle. With most policies, coverage pays for actual repairs to the rental car, but you remain responsible for your policy deductible. In addition, the rental agreement often makes you responsible for "additional" items, and that’s where many issues can arise.
NOTE: If your personal auto policy does not include physical damage coverage, the rental car will not be covered if it's damaged. In addition, if you rent a car outside of the United States, coverage may not be extended.
Q: I've also heard that if I use my credit card to pay for the rental vehicle, the rental vehicle will be covered. Is this true?
A: Many, but not all, credit card companies offer rental insurance, and will pay for damage to a rental car if you pay for the rental vehicle with that card. However, the coverage will be secondary to your personal auto policy. In other words, your credit card company may pick up certain things that your personal auto policy does not cover, such as your deductible. It is best to check with your specific credit card company to see what coverage may be provided.
Q: If my personal auto policy covers my rental car, and if my credit card covers my deductible, doesn't this mean I'm fully covered?
A: While your personal auto policy and use of a credit card may provide adequate coverage, they frequently fall short.
The rental car company may come after you to pay certain fees such as towing, loss of use (the period the rental car is out of service for repairs), diminished value (wrecked and repaired cars are viewed as less valuable than undamaged, factory originals) and administrative fees. All of these fees may be tacked on by the rental car company in the event of an accident, and all of which you can be held liable for. By signing the rental agreement, the renter is always responsible for any loss or damage to a rental vehicle, regardless of who is at fault.
Q: Would it be wise to purchase the "extra insurance" offered by the rental car company?
A: A loss damage waiver (LDW), sometimes called a collision damage waiver, purchased from a rental car company essentially takes the place of your own collision and comprehensive insurance, letting you and your insurance company off the hook if you wreck the rental car, or if it's stolen or vandalized. In exchange for purchasing the LDW, the rental company agrees to "waive" claims against you for damages in the event of an accident. But, your LDW coverage could become void if the accident was caused because you were speeding, driving under the influence, or the accident was the result of a reckless act or error on your part.
Before renting, familiarize yourself with your insurance options by:
* Contacting a Rutt Insurance agent and finding out if you have enough coverage under your existing policy; and
* Contacting your credit card company to find out if it offers rental car coverage, and what the restrictions and limitations may be.
If the two coverage methods mentioned above seem inadequate for your needs, you may wish to consider the purchase of a LDW.
Q: Are there any other options?
A. Because of the prohibitive cost of purchasing Loss Damage Waivers from rental car companies, many people choose to forego the purchase and take the risk of being hit with fees. Realizing the need for a more affordable solution some companies specializing in travel insurance have begun offering Rental Car Insurance. Companies such as Allianz Global Assistance, are now offering a more affordable alternative to the Loss Damage Waivers offered by many rental car companies.
Q: What should I do?
A: Making such a personal decision about your options is yours - and yours alone under the law. As your independent insurance agent, we will do our best to help explain your options. Our agency's job is to help provide you with information on these choices so you can make the best informed decision for you and your family.