Who pays for damage to a rental car?
People rent cars for numerous reasons. They might choose to rent the vehicle while their own car is in the shop, while vacationing in another state or to travel to a business convention. Whatever the purpose of the rental, you will need to ensure that the car is protected against damage sustained in an accident. You will be held liable for any accidents caused while operating the rental vehicle, so it’s in your best interests to make sure it is properly insured against possible risks.
There are three primary ways to cover damage to a rental car. No method is necessarily better or worse than the others, but each has its own strengths and weaknesses. It’s worth your time to review the options and choose whatever works best for your specific situation. No matter what you choose, knowing in advance that the damage will be covered will help you prepare for the possibility of a collision.
Transferring Your Own Coverage
If you have full coverage on your own insured auto, that coverage will automatically transfer to any rental car you drive. Whatever coverages you carry on the newest car on your policy will be the ones that apply to the rented vehicle. This means that your liability, collision and comprehensive coverages will all transfer over directly and will apply to the rental car in exactly the way they do for your own vehicle. For example, the limits of your liability coverage will be the same, and you will owe the same deductible for collision.
The primary benefit of using your own auto insurance coverage for damage to a rental is that it doesn’t cost anything extra. Since you are already paying to insure your own vehicle, you don’t have to purchase additional coverage for the rental car. If you’re not involved in an accident, you don’t have to worry about paying for anything.
The down side of using your own coverage for a rental car is that you are responsible for paying a deductible if the car is involved in an accident. Depending on your policy, this deductible could be as high as $1,000. You’re responsible for paying that out of pocket to the rental company if the car is damaged. Furthermore, some rental companies charge the full amount of your deductible as a security deposit, so if you have a high deductible, you may wish to choose a more affordable option.
Buying Coverage from the Rental Company
All rental agencies offer a collision damage waiver when you rent a vehicle. This insurance comes in the form of an additional fee paid to the rental company. The actual amount of the fee will vary from one provider to the next, but it can be as much as $15 extra per day that the vehicle is rented. This coverage will be applied fully to the cost of repairing the vehicle, and you will also lose any security deposit that you put down toward the cost of repairs.
The inherent benefit of buying the collision damage waiver is that you won’t need to pay any large sums for repairs. You also do not need to file a claim against your insurance policy to get the damages covered. If the rental car is damaged, you can simply turn it back in, forfeit your security deposit and the rental company will take care of the rest.
The flaw with buying the collision damage waiver is that it can be very expensive. The amount of your deposit may vary depending on your credit score, driving history and other factors, or it might be set by the company. If you’re renting the car for a long period, paying a daily fee can add up very quickly.
Credit Card Insurance for a Rental
Most rental companies require you to use a credit card to rent the vehicle so that the security deposit can be placed as a hold on the card. Recognizing this link between credit cards and rental companies, some credit card companies offer insurance to cover rental cars.
The extent of the coverage will vary from one company to another. Before choosing this option, be sure to check with your credit card company to see if there are limitations or deductibles that apply to the loss. In some cases, the insurance is very thorough and will easily replace other types of coverage; in other cases, it will only cover limited types of losses.
If you travel a lot for a job or other reasons, it’s worth getting a credit card that has especially good rental car insurance. You can ask about this feature when applying for the card of search online for detailed reviews about how it works. This will help you decide what card will offer the best protection and if using your credit card is smarter than using a different type of rental car insurance.
Before buying any kind of insurance for a rental car, it’s also worthwhile to verify that you need to purchase insurance at all. In some states, damage to a rental car is covered under your liability coverage, not your collision; this means that there is no deductible applied to an accident in a rental car, so there is no reason not to simply use your own insurance.