You’ve just started your vacation. You’ve arrived at your destination, collected your luggage, and are in the process of renting a car. You’ve given the person behind the counter your drivers license and credit card, and now you’re being asked if you want to buy their insurance.
It’s expensive. Do you need it? Well … it depends.
Immediate red flags:
Using the Car for Business?
If you’re using the car for business while on your trip, chances are your personal auto policy will not cover you. You definitely want to check with us BEFORE you rent a car for business purposes.
Outside The US or Canada?
Most policies will only cover you in the United States and Canada. Typically a limitation of 25 miles into Mexico is covered . If Canada we can provide a Canadian Id card free of charge from your Tx policy. If Mexico, we can offer mexico insurance policies for your trip for additional premium.
Renting a large vehicle or moving truck?
If it weighs more than 10K lbs then its excluded from coverage on the Texas auto policy. FYI: a 16 foot moving truck weighs 11.5K and would not be covered under the auto policy. When renting a truck typically you can find vehicle’s weight on the rental company’s website.
Damage to the Rental Car:
On a Texas auto policy coverage is extended from your liability property damage. This can vary from 25K to 100K in coverage. There is no deductible. Insurance policies for other states subject you to the comprehensive or collision deductibles.
NOTE: Your property damage liability covers the rental car damage and the other person’s car under one limit. So if you carry 25K, you can see two cars could easily exhaust the limit. It’s just one of many reasons to up your coverage to at least 100K for property damage.
Damage to Other Property or People:
Liability coverage you carry on your auto policy kicks in if you damage another vehicle or other property, or hurt other people. Your personal auto insurance policy will cover you in your rental car at the same level of liability protection you carry on your policy.
What do Credit cards cover?
With other states insurance policies that apply a deductible, it will cover that cost.
The coverage can be beneficial when traveling outside the US and Canada to protect from collision and theft. However it still does not cover comprehensive losses or liability. So you will need to still purchase some insurance. The below link can get you started in the right direction.
Rental car companies can sometimes charge fees beyond the cost of the accident itself. Most large insurance companies pre-negotiate with rental car companies to not charge these items. BUT, you are always to some extent at risk of these costs.
Loss Of Use:
The rental car company receives income by renting their cars. If you wreck their car, they can’t rent it to anybody else until it’s fixed. In theory they’re losing money and they’ll charge you for that “loss of use.”
But your insurance company won’t pay it! Here’s why … In theory, it makes sense. But insurance companies don’t pay for theories. They only pay for actual economic loss. Essentially, the rental car company must prove that every single vehicle in their fleet was rented, and they had to actually turn away customers because the car that you wrecked was out of service.
Second, the rental car company will charge you an administrative fee –depending on how high the repair cost these average 50-150 dollars. Again, your insurance company isn’t going to pay that fee. It’s not an insurance loss.