Vacation Rental Cars

People always ask me, “Should I buy the insurance from the rental car company when I go on vacation, or will my personal policy cover me?

Short answer: Yes & Yes, your personally auto policy coverages will go with you when you rent a car while on vacation, however....

This doesn't mean that your personal insurance policy will cover everything. You MAY want to purchase the Loss Damage Waiver (LDW) portion of the insurance from the rental company. Here’s why…

There are some areas of exposure when you rent a car that do not apply to your everyday auto insurance

1. Loss of Rental income: The rental car is damaged and will take time to be repaired. The rental company would have rented the car out had it not been in an accident. They have the right to ask you to pay their loss of rental income on the damaged car.

2. Diminution of value- You damaged a rental car in a collision. The rental company then repairs and decides to sell the car. They only get $15,000 for the used car that they would've gotten $17,000 had it not been in a collision. The rental car company can bill the customer for that loss. That $2,000 will not be covered by your personal auto policy nor your credit card company.

Note: Many Credit Card companies offer secondary coverage on rental cars such as: loss of rental income, deductible, or may offer additional physical damage limits. Take the time to call them before you go on vacation to find out what perks are offered by your program.

General tips:
1. With any rental, be sure to point out any damage to the car that was there before your drive away. You don’t want to be charged for something you didn’t do.

2. Excluded Uses & Drivers- Make sure you list who will drive your car and note any exclusions of coverage. Example: many rental agreements exclude coverage if a valet drives the car or driving off-road.

3. Your credit card limit- Remember that if you are in an accident, the rental agreement may require immediate reimbursement for damages and the rental company will charge it to your credit card. If you limits are maxed out, it could shorten or ruin your vacation.