Have you ever been standing at the rental car desk when the clerk asks
"Would you like to add insurance to your rental vehicle today?"
And you wonder 'doesn't my auto policy cover the rental already? What about my gold rewards credit card? Or should I buy the rental company's insurance?'
Unfortunately there isn't a quick answer for you. Rental car coverage can be misleading, more misleading than we would like it to be.
There are several things to consider when making this decision:
- If you have full coverage on your auto policy, you have liability coverage, collision coverage, and fire and theft coverage, then your auto policy likely extends coverage to your rented vehicles. This will only be true providing you are using the vehicle for the same use as the coverage you have on your auto policy. That means if you have a personal use auto policy, it will not extend to your rental if you're going to be using the rental vehicle for commercial purposes.
- If you're in Canada, you can drive the rental vehicle right through the United States all the way down to the US-Mexico border. But your coverage will stop once you pass the Mexican border!
One question I frequently get asked as an insurance broker is:
3. "Will the rental car coverage extend to other drivers on my policy, like my kids?" The good news is yes! Whoever is listed on your policy as a driver will be able to go get a rental car and have that rental car coverage extended to that vehicle that they are driving.
4. Coverage Provided by rental car companies can be expensive - $25-$30 per day, compared to an annual fee of about $25 on your auto policy to have that coverage extended for an entire year. One way rental car companies get you to buy their insurance is by telling you
that should you have an accident, using their insurance will not affect your personal insurance.
This is likely true because your personal insurance is technically being the lent to the rental car you are using. So when you use your personal insurance to cover the rental car, it is your personal insurance that pays the claim if you have an accident, therefore affecting your personal policy, which could affect your rates.
What happens if you have an accident with the rental car?
5. Rental car companies have little tricks or nuances that they may use if you don't buy their insurance which could stick you with hundreds of dollars of unexpected charges on your credit card should you wreck their car.
The rental car company receives income by renting their cars. If the car is damaged and unavailable, they can't rent it to anybody else until it is fixed or repaired. Technically, they're losing money and they'll want to charge you for that "loss of use". Your insurance company won't want to pay for this loss of use. Rarely are all the cars ever rented with the rental car company as they always have a vehicle available to be rented to someone else. So they are not actually losing money because the one car you wrecked is out of commission.
You also have to watch out for administrative fees. These fees compensate the rental company for all the paperwork they must do to process the claim. Your insurance company isn't going to pay those fees it's not an insurance loss it is a way for the rental company to charge you fees for their inconvenience.
So should you buy the rental company insurance at the rental counter or not?
Before you start your travels give us a call here at Bethel insurance Brokers 905-683-2323. We'll make sure you're protected in your rental car with the right insurance.