Car rental insurance: What to know before you go

BY KATHY DIXON

Imagine taking a long-awaited trip to Italy. You check in at the rental car office and are asked if you’d like to purchase rental insurance.

You decline, thinking that your personal auto insurance policy will cover you in the event of an accident.

You may want to reconsider.

Personal auto insurance policies will cover damage to a rental car if you’re in the U.S., Canada or any U.S. territory. However, if you’re renting a car anywhere else, your coverage won’t transfer.

“A lot of people don’t realize that,” noted Anne Baskette, director of claims administration for Virginia Farm Bureau Mutual Insurance Co.

But even in covered countries, a driver’s collision and liability coverage will only follow them if they rent a passenger vehicle similar to one endorsed on their personal auto policy.

For example, if you’re helping a child move from Richmond to

Virginia Tech and you rent a moving truck, your personal auto policy won’t cover damage to that truck if you’re involved in an accident.

No matter what type of vehicle you rent, Baskette recommends purchasing the rental insurance— called a Collision Damage Waiver— offered by rental companies. The reason is that even if your auto policy covers you for vehicle damage, it may not include secondary charges. Things like diminished value or loss of use of the vehicle, as well as administrative costs, are not covered under a personal auto insurance policy.

Suppose you’re driving a rental car, and a rock hits the windshield and damages it. Under a personal auto policy, windshield replacement would be covered. However, that policy would not pay the rental car company for losing the use of that vehicle while it’s getting repaired.

“In most cases the insured’s collision and liability coverage will extend to rental vehicles that are similar to their own, but we still recommend customers purchase a CDW when they’re renting,” Baskette noted. “If you don’t purchase the extra coverage, you’re rolling the dice. It’s better to pay a nominal daily rental fee than to end up paying thousands of dollars if something happens and you’re not covered.”

Best practices when renting a vehicle

Purchase the rental insurance offered by the rental company, even if you have a personal auto policy.

Be sure to list any potential drivers on the contract. If only your name is on it, and you get sick and someone else has to drive, they might not be covered under the rental contract.

Inspect the vehicle thoroughly before driving it off the lot. Note any scrapes, nicks or dents on the checklist provided by the rental company, and photograph the vehicle as well.