21 Feb ASK SAVA: Insurance Coverage for a Rental Car
Question: “Does my auto insurance policy cover a rental car on vacation?” C.F., Mystic, CT
Answer: This is actually one of our clients’ most common questions. You have the option to purchase a “Loss Damage Waiver” (LDW) from the rental car company. If purchased, this waiver relieves you from financial liability for the loss of, or damage to the rental car and the parts and accessories that come with it. You may consider purchasing the “LDW” for the following reasons:
- Rental car companies only make money when they are renting out their cars. If the car you rented gets damaged and needs repair, the rental car company cannot rent it during the repair process, which can often exceed several weeks. In most cases, the fine print in your rental agreement will stipulate that you owe the rental company for loss of rental income during the repair.
- If you don’t have collision and comprehensive coverage on your auto policy, or if you don’t want the rental car company to charge your credit card for the total cost of the repairs (which they will do), you should buy the “LDW”. If you have comprehensive and collision coverage on your auto policy, buying the “LDW” may sound like buying duplicate coverage. But if you buy it, you may not have to file a claim under your personal auto policy, you won’t have to pay the deductible, and you may not face a rate increase at your next renewal.
- If you decide to buy the “LDW”, be sure to read the fine print. There are likely to be some exclusions, such as coverage that does not apply for drivers not listed on the contract, when driving intoxicated, when driving off road, or when driving certain stretches of road, such as the infamous road to Hana in Maui.
- One common question is, “Doesn’t my credit card provide insurance coverage for a rental car? MAYBE. Some of the premium credit cards (Gold and Platinum, etc.) do indeed offer coverage for a rental car. Since the contracts vary from card to card, you may want to call your credit card company to find out exactly what is covered. Some cards may only provide secondary or excess coverage, requiring you to file a claim with your own auto policy before the credit card coverage applies. Our recommendation is: Don’t rely on insurance coverage through your credit card unless you’ve researched this issue thoroughly.
- Finally, keep in mind that your personal auto policy will only extend protection in the United States and Canada. If you plan on renting a car in Europe, Asia, or South America, your personal auto policy will not extend. In that case, it is best to purchase maximum limits of liability, in addition to collision and comprehensive coverage, directly from the rental car company.
Because we don’t want your vacation spoiled by delayed travel or a surprise charge to your credit card due to “traps” in the rental car contract, please take the time to investigate this issue thoroughly. And if you need some clarification on this issue, we have knowledgeable agents that can help answer your questions.
Michelle Jacobik, Vice President
SAVA Insurance Group
“Protect what you value the most!”