Consumers today will consider any method to save money, especially when dealing with auto insurance. When renting a car most look for two things: price and model, never considering additional coverage as it is typically covered by your own auto policy. However, you may discover that your policy may not be enough to cover damages sustained while renting a vehicle. This may make you think twice about purchasing added value rental car coverage to your policy before your rental term.
Often we get calls from our clients asking what coverage, if any, they need to purchase when renting a car. If your policy provides liability, collision and comprehensive coverage, it is extended to cover a rental vehicle, subject to your deductibles. That being said, there can a large gap between what the policy provides and the responsibility you contractually agree to when you sign the rental company forms. Remember, you are not just signing forms, you are entering a binding contract.
Two areas of concern exist if you return a car with damage. The first is “diminution in value,” including loss of use. In essence, it holds you responsible for the reduction in market value of the vehicle returned with damaged. Also, you may be accountable for the time the vehicle is in for repairs and not available to rent (loss of use).
The second, “before and after,” is a problem if the damaged car is returned and the rental car company chooses to remove it from its fleet and sell it for salvage. You will be responsible for the difference in value of the car before you rented it to the value of the car after it has been salvaged. You may also once again be accountable for the time the vehicle is in for repairs and not available to rent (loss of use).
The rental company can offer you a “lost damage waiver” which typically costs between $15-$30 per day. While this feature covers you for many types of losses, it does not cover you for prohibited use. Specifically, if the car is driven recklessly or if the driver is intoxicated, the coverage is excluded. Also, only the driver named in the contract is covered. No other driver, including a valet, is covered. Theft of the vehicle if left unlocked would also void the waiver.
Often the vehicle is dropped off just prior to boarding a flight, so the time you have to contest any damage is limited. Remember, they are in possession of your credit card information and you may be shocked to later learn that you are legally liable for all repairs.
The good news is that you can purchase added value rental car coverage through your auto policy. These coverage enhancements will address the gaps in coverage. Your insurance agent can suggest the proper coverage enhancements which you will find very affordable.
Getting a great price for a rental is wonderful, but having the proper coverage at the time of loss is essential.