August 6, 2014 3:21 am
Long gone are the days of simply renting a car by the day or week from the closest established rental car company. Now you can rent a car by the hour, from almost any location, or even use a car-sharing service to rent someone else’s personal vehicle. By law, rental companies must provide the state-required amount of liability insurance. Generally, these amounts are low and do not provide much protection.
In order to make the best decision regarding your coverage, make these two calls:
Your insurance professional
If you own a car, find out how much coverage you already have. In most cases, whatever insurance and deductibles provided by your auto policy would apply to a rental car, providing you are using the car for recreation, not business. However, if you have dropped either comprehensive or collision on your own car as a way to reduce costs, you will not be covered if your rental car is stolen or damaged in an accident.
Check to see whether your insurance company pays for administrative fees, loss of use or towing charges. Some companies may provide an insurance rider to cover some of these costs, which would make it less expensive than purchasing coverage through the rental car company. Keep in mind, however, that in most states, diminished value is not covered by insurers.
If you do not own a car and are a frequent renter, ask about a non-owner liability policy. This would provide insurance when you either rent or borrow another person’s car.
Your credit card company
Most credit card companies provide some level of insurance for rental cars – to find out the details of what is covered, call the toll-free number on the back of the credit card you will be using to rent the car and ask them to send you coverage information in writing. In most cases, credit card benefits are secondary to either your personal auto insurance policy or the coverage offered by the rental car company.
Insurance benefits differ widely by both the credit card company and/or the bank that issues the card, as well as by the level of credit card used. They generally do not provide personal liability coverage. Some credit card companies may provide coverage for towing, but may not provide for diminished value or administrative fees.
Car-sharing services and hourly car rental providers are not standardized when it comes to insurance coverage. Many services will include insurance coverage in the cost of the rental. Others may not. Some may also charge fees for damage to the car. Some may offer supplemental coverage. Read the insurance information on the company’s website and don’t be afraid to call the rental car company or the car-sharing company as well as your insurance professional if you have any questions.
Source: Insurance Information Institute
Published with permission from RISMedia.