I was on vacation in another state last year and when I went to the car rental desk at the airport they insisted I should buy extra insurance coverage. I had checked with my agent before I left and she said I didn't need to buy extra coverage, so I declined. We're taking another trip this year and I want to be sure I'm covered. Do I need to buy the extra coverage? It's pretty expensive.
We've had the same experience with rental car companies. Policy language differs from company to company, but generally, your car insurance covers a rental car in the same way your own car is covered. If you are involved in an accident, you may have coverage for damage to the rental car and you may be protected if you damage another person's vehicle or injure them in an accident. Let's take a look first at damage to the rental car.
If you have physical damage coverage with a $500 deductible on your own car and you are in an accident, you pay the first $500 and your insurance company pays for the rest of the damage. A rented car would be handled the same way, with you paying the first $500. One difference is the rental car company may also want to be paid for loss of rental value, so you'll want to be sure and check with your company to find out if this would be covered. If you don't have physical damage coverage on your own car, the rental company will probably require that you buy the extra coverage.
If you're driving your own car and you injure someone or damage their property, your insurance company will pay damages for which you are legally responsible. The company will also provide an attorney and pay for the cost of defense if legal action is taken against you. Again, most car insurance policies would do exactly the same thing for you if you're driving a rental car.
Some people may choose to buy the extra coverage from the rental car company just to avoid having their own insurance company involved. It's a personal decision whether the cost of the coverage is worth it. We recommend checking with your insurance agent, just as you did last year, and asking specifically how the coverage works. Sometimes there are limitations or exclusions that might apply, particularly if you are renting the car for an extended period of time, using the car for business, or if you're renting a truck or moving van. We've also run into situations where people are traveling together and the person who signs the rental car agreement then allows one of the others to drive. Your own insurance coverage may only apply to you.
One additional suggestion. We understand some credit card companies may also have coverage for rental cars, so we recommend checking with your credit card company as well.