Should I buy the rental car insurance?
Here’s the answer you’ve come to love- MAYBE.
Insurance is regulated by state law, so I can only speak for Ohio. And with the 100’s of insurance companies licensed to do business in Ohio, I can’t speak for all of them. BUT, what I can do here is offer general guidelines and important things to consider when deciding whether to purchase rental car insurance or use your Ohio auto insurance policy. I’ll also throw out a few questions you should ask when trying to make the decision.
First- let’s take a look at your auto insurance policy
The basic auto insurance policy is composed of several parts. For the sake of renting a car, the two parts we’re most concerned with are liability and physical damage.
Liability pays for bodily injury and property damage to others. Physical damage covers damage to the vehicle. The physical damage coverage is made up of two parts: comprehensive and collision. Comprehensive covers glass breakage, fire, theft, vandalism, hitting an animal and falling objects. Collision is just that- collision with another object (besides an animal), overturn or upset.
So what you want to ask your insurance agent is whether or not your policy extends to a rental car, and what coverage extends. Liability is super important in the event you get into an accident and damage property or hurt someone. Physical damage is also important in case you damage the rental car in an accident.
The idea here is that your auto insurance would pay for a liability or physical damage claim for this rental vehicle just like for one of the cars on your policy.
So you would call your agent when the accident happens, and the claim would be submitted like any other.
HOWEVER, there are a few things you need to consider so you can decide whether using your auto insurance or purchasing the rental car insurance is the best option for you.
What liability limit does the rental car insurance offer?
Each state has minimum liability limits to be considered “financially responsible” to operate a motor vehicle. For example, Ohio’s limits are $25,000 per person and $50,000 per accident for bodily injury and $25,000 for property damage.
The rental car companies are only required to provide these minimum limits. So that’s what you’ll get, unless there are additional limits available for purchase. What if the accident exceeds those amounts? Your auto insurance policy would come into play as a secondary insurance and pay up to its policy limit.
So theoretically, you may have more limit at your disposal using your auto insurance policy.
How do I get physical damage coverage for the rental car?
It’s been our experience that a minimum of ONE vehicle on your auto insurance must have comprehensive and collision, in order for those coverage items to extend to the rental car. It makes sense- for coverage to extend you have to have the coverage in the first place.
As stated above, the claim would be submitted like any other.
What if you DON’T have comprehensive and collision on any of the vehicles on your auto insurance? Rental car companies commonly offer a coverage called Collision Damage Waiver. This coverage removes a car renter’s liability for all or some damage to a rental vehicle in an accident. It MAY also cover theft or vandalism.
A great question to ask: what does the collision damage waiver cover?
What else might the rental car insurance offer that my auto insurance doesn’t?
In talking with our customers, we’ve discovered some rental car companies may charge for items that an auto insurance policy has historically not paid for, such as loss of use.
If a rental car is damaged from an accident and unable to be rented, there is lost income while it is out of service. The rental car company may charge you for this time period.
Another example is diminished value. When a car is damaged in an accident, the idea is that it is worth less when it’s eventually sold. The rental car company may charge you for this perceived loss of value.
We’ve not yet run into a situation where our customer’s auto insurance has paid for either of these. So in the absence of that, you would pay.
A great question to ask: does the rental car insurance pay for loss of use and diminished value?
A few final thoughts to help you decide whether or not to buy the rental car insurance
If you’re using your auto insurance for a rental car, and the accident happens out of state, it IS possible that the insurance company will have to hire an outside adjuster (one that doesn’t work for the insurance company) to work on your claim. So it is possible there could be a delay in getting an adjuster.
If you buy the rental car insurance, the idea is that you can basically call the rental car company and they will take care of everything.
And as previously mentioned, the rental car insurance may pay some expenses that insurance doesn’t.
The downside is that yes, it costs money to buy the rental car insurance. The upside is that by purchasing it, you may avoid a big headache if you’re involved in an accident.
