Everything You Need to Know Before You Rent!

If you're standing at the rental car counter and the representative asks, "Would you like to add our coverage?" you're not alone if you're unsure what to do.

This is one of the most common questions we get from clients before a vacation or business trip.

The answer is usually yes—but not always.

Whether your personal auto insurance covers a rental car depends on the coverage you carry and a few important details that many people don't think about until they're already at the counter.

Let's break down how rental car coverage works and when it may make sense to purchase the rental company's protection.

Does My Auto Insurance Cover Rental Cars?

In many cases, yes.

If you carry collision and comprehensive coverage on your personal vehicle, those coverages will often extend to a rental vehicle that you're using temporarily.

That means your:

• Liability Coverage
• Collision Coverage
• Comprehensive Coverage

may apply to the rental vehicle just like they do your own vehicle.

For example, if you back into a pole and damage the rental car, your collision coverage would generally respond the same way it would if you damaged your personal vehicle.

Your deductible would still apply, just as it would on a claim involving your own car.

Because every insurance company and policy can be a little different, it's always a good idea to verify your coverage before traveling.

What Coverage Transfers To A Rental Car?

While every policy is different, the following coverages often transfer to a rental vehicle:

• Bodily Injury Liability
• Property Damage Liability
• Collision Coverage
• Comprehensive Coverage
• Medical Payments or Personal Injury Protection (where applicable)

One important thing to understand is that the rental car does not automatically come with better coverage simply because it is a rental.

In most cases, the coverage follows you and your policy.

Should I Buy The Rental Car Company's Insurance?

Sometimes yes. Sometimes no.

The rental company usually offers a Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW).

Technically, this isn't insurance. It's an agreement stating that the rental company won't pursue you for covered damage to the vehicle.

Many people decline this coverage because they already carry collision and comprehensive coverage on their personal auto policy.

Others choose to purchase it because it can simplify the process if damage occurs and may help them avoid filing a claim through their own insurance company.

The right choice depends on your comfort level, your existing coverage, and the specifics of your trip.

What Isn't Covered By Your Personal Auto Insurance?

This is where many rental car customers are surprised.

If a rental car is damaged while in your possession, your personal auto insurance policy will generally pay for repairs to the vehicle, provided you carry collision and comprehensive coverage on your own vehicle.

However, there are two expenses that are often not covered by a personal auto policy.

Loss Of Use.

While the rental vehicle is being repaired, the rental company cannot rent it to other customers.

As a result, they may charge you a daily rental rate for the time the vehicle is out of service.

This charge is commonly referred to as Loss of Use, and many personal auto policies do not cover it.

We've seen rental companies pursue customers for these charges even when the vehicle damage itself was covered by insurance.

Diminished Value.

Even after a rental vehicle is repaired, the rental company may argue that a vehicle with an accident history is worth less than it was before the damage occurred.

They may seek reimbursement for this reduction in value, commonly referred to as Diminished Value.

Many personal auto insurance policies do not provide coverage for this expense.

What If You Purchase The Rental Company's Coverage?

If you purchase the rental company's Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW), the rental company generally agrees not to hold you responsible for covered damage to the vehicle.

In addition to physical damage, these waivers often protect you from Loss of Use and Diminished Value charges that could otherwise become your responsibility.

An Important Requirement For Coverage

For coverage to apply, the driver should:

• Be listed as a driver on the rental agreement
• Be an insured driver under the personal auto insurance policy being relied upon for coverage

If either requirement is not met, coverage may be denied.

Does My Credit Card Cover Rental Cars?

Possibly.

Many credit cards offer some form of rental car protection when you use the card to pay for the rental.

However, coverage can vary significantly depending on the card issuer.

Some cards provide secondary coverage, meaning your personal auto insurance would still be used first.

Others provide primary coverage, which may allow a claim to be handled without involving your personal auto policy.

Before relying on credit card coverage, take a few minutes to review the card's benefits guide or contact the issuer directly.

When Might Buying The Rental Company's Coverage Make Sense?

There are situations where purchasing the rental company's protection may be worth considering.

For example:

• You do not carry collision coverage on your personal vehicle
• You are traveling internationally
• You want to avoid filing a claim on your personal insurance
• You prefer the convenience of having the rental company handle any damages directly
• You are concerned about paying a deductible if an accident occurs
• You want protection from Loss of Use or Diminished Value charges

Every situation is different, which is why there isn't a one-size-fits-all answer.

Do I Need Rental Car Insurance If I Already Have Full Coverage?

In many cases, people who already carry full coverage on their personal vehicles have protection that extends to rental cars.

That doesn't automatically mean you should decline the rental company's coverage, but it does mean you should understand what you're already paying for before purchasing additional protection.

The most common thing we see is people paying for extra coverage simply because they aren't sure what their own policy already provides.

A quick review before your trip can help you make an informed decision and potentially save some money.

Frequently Asked Questions About Rental Car Insurance.

Does Insurance Follow The Car Or The Driver?

In most situations, your insurance follows you as the driver, not the specific vehicle you're driving.

That's why many personal auto policies extend coverage to a rental vehicle you're using temporarily.

However, every policy is different, so it's always smart to verify coverage before your trip.

Does Farm Bureau Insurance Cover Rental Cars?

Many Farm Bureau auto policies extend liability, collision, and comprehensive coverage to rental vehicles used for personal purposes.

As with any policy, coverage depends on the specific policy language and circumstances of the claim.

If you're unsure, contact your agent before renting the vehicle.

Does Progressive Insurance Cover Rental Cars?

Many Progressive auto policies provide rental car coverage similar to the coverage carried on your personal vehicle.

If you carry collision and comprehensive coverage on your own car, those coverages may extend to a rental vehicle.

Always verify coverage with your carrier before relying on it.

What Is Loss Of Use On A Rental Car?

Loss of Use is a charge rental car companies may assess when a damaged vehicle is being repaired and unavailable to rent to other customers.

Even if your insurance pays for the repairs, Loss of Use charges may still become your responsibility

What Is Diminished Value On A Rental Car?

Diminished Value refers to the reduction in a vehicle's market value after it has been involved in an accident.

Some rental companies may seek reimbursement for this loss, even after repairs have been completed.

Many personal auto insurance policies do not provide coverage for Diminished Value claims.

Does Every Driver In The Rental Car Have Coverage?

Not necessarily.

To avoid coverage issues, anyone who may drive the rental vehicle should be listed on the rental agreement and should qualify as an insured driver under the applicable auto insurance policy.

This is one of the most common mistakes we see involving rental vehicles.

Should I Buy The Rental Company's Coverage If I Already Have Full Coverage?

Maybe.

If you already carry collision and comprehensive coverage, you may already have protection for physical damage to the rental vehicle.

However, the rental company's coverage may still provide value by protecting you from Loss of Use charges, Diminished Value claims, and the hassle of filing a claim through your own insurance company.

Not Sure What Applies To You? Give Us A Call.

After handling plenty of rental car claims over the years, we've found that most people either assume they're fully covered or assume they have no coverage at all.

The truth is usually somewhere in the middle.

Some people have coverage through their personal auto policy. Some have protection through a credit card. Others have gaps they don't realize exist until they're standing at the rental counter trying to decide what to do.

That's why we encourage people to call before they travel instead of guessing.

At RecLending Insurance Services, we're happy to review your current policy, explain what coverage would transfer to a rental vehicle, and help you understand whether purchasing the rental company's coverage makes sense for your specific situation.

A quick conversation before your trip can help you avoid paying for coverage you don't need—or finding out after an accident that something wasn't covered the way you expected.

Insurance isn't one-size-fits-all, and neither is rental car coverage. If you have questions, give us a call. That's what we're here for.

Final Thoughts!

Before your next trip, take a few minutes to review your auto insurance policy or speak with your insurance agent.

Knowing what coverage you already have can save you money and help you make a confident decision at the rental counter.

Rental car coverage doesn't have to be confusing. Most of the time, a quick conversation beforehand can answer your questions and help you avoid surprises later.

If you'd like a second opinion or want help understanding how your current policy would respond to a rental car claim, we'd be happy to help.