A vacation from 2020 sounds like a good idea. If you travel and rent a vehicle, do you need to purchase auto insurance from the rental car company? The answer could be YES or NO based on the coverage you are carrying on your current policy. The “broadest” coverage you carry on any one vehicle does carry over to a rental car. The liability, comprehensive, medical and collision coverage do transfer to the rental car. If you only carry no-fault liability coverages, you will want to purchase physical damage coverage from the rental car company as your policy will not protect you.
TWO important situations can occur with the rental vehicle that are likely not covered (but be sure to call and ask)
- Diminished Value or Replacement Cost – if the rental vehicle is damaged in an accident and your insurance company declares the vehicle a total loss, your policy pays “actual cash value” at the time of the accident. The rental car company replaced the vehicle at a higher cost for a “new” car. They can bill the difference between their actual cost and the actual cash value payment. This figure could be hefty.
- Loss of Use – if the rental vehicle is damaged in an accident and is in the repair shop for 10 days, the rental car company can bill you for the days the vehicle sat in the garage and was not rented out. They can bill you for those days for loss of use.
Coverages may be offered by an insurance company for an additional premium, and sometimes you can purchase them through the rental car company. Just a good reason to call your agent and have a frank discussion.