Insuring Your Rental Car

While smart consumers prefer to make decisions armed with real insights, it is unrealistic to expect more than a few to know the right questions to ask. What are my risks? What are the differences in the protection provided by each option? Is any protection being duplicated? Triplicated? Which coverage is primary? Add to this uncertainty and angst the insurance misinformation often inserted by the rental car company representative: \ Are you SURE you wish to decline? Does your insurance coverage protect you in this state? Sign here to decline this important protection. Now let's go and document the condition of the car. Sign here to agree this report reflects the condition of the car. Have a nice trip.\ Bigger gulp.

With some proper planning, these questions and many more can be addressed well before the consumer is at the car rental counter. Those who are in a role to counsel consumers can begin by explaining the forms of coverage that will be made available for purchase at the counter. Essentially, rental car providers make the following four forms of basic coverage available.

Damage waiver: either collision damage waiver or loss damage waiver (LDW)—in addition to waiving responsibility for collision or theft, this coverage often waives loss of use and other administrative charges not often provided by private passenger automobile insurance policies. Charges for this coverage can range from $9 to $19 a day.
Liability coverage available at varying limits: Charges range from $7 to $14 a day.
Medical coverage after an accident: Charges range from $1 to $5 a day.
Personal effects coverage: Charges range from $1 to $4 a day.

For obvious reasons, consumers who do not own a car are best advised to think three times before declining any coverage made available by the rental car company. Unless care has been taken to purchase named nonowned automobile coverage, those renting cars should always purchase liability protection from the rental car provider, at a minimum. As we'll see, while alternative forms of coverage may be available, those who do not have automobile insurance must proceed with the greatest caution before declining the protection offered by the rental car provider.

For those who own a vehicle and have private passenger automobile insurance, there is strong agreement that accepting the liability and medical protection offered by the rental car provider only serves to duplicate the protection already provided by a personally owned auto insurance policy.

Rental car companies do not sell insurance but instead offer to \ waive\ the costs they will incur after a theft, collision, or other damage to the vehicle they make available for rent. Those advising consumers who own a car with comprehensive and collision coverage that their personal policy will be available to pay for damages to a rental car from theft or collision are correct, but only partially correct.

Nickel-and-dime claims: Often, minor scratches, dents, etc., can result in damages in the hundreds of dollars and well below the collision deductible on a personal auto policy, resulting in an out-of-pocket expense for those who decline the waiver.
Loss-of-use costs: Damage that results in the rental company alleging the time it took to repair the car prevented it from earning rental income for a period of time can result in \ loss-of-use\ charges.
Before-and-after costs: The costs that arise when the value of a rental car becomes diminished after an accident are rarely covered by traditional personal insurance policies. They can also be significant.
Extra fees: Purchasing the damages waiver from the rental car provider will also waive \ administrative expenses\ incurred after a loss. Essentially, these are soft costs incurred after a claim such as storage, claims adjustment expenses, and towing. While these costs are not often very significant, they are also not covered by most personal auto insurance policies.

For Wadena Personal Auto policyholders, purchasing coverage from the rental car company may not be necessary. If at least one vehicle on your policy carries either “Other than Collision” or “Collision” Coverage, we will pay all reasonable expenses you incur resulting from a covered accident or other covered loss to a car that you rent from a commercial rental car agency. Specifically, this coverage enhances your current rental car coverage by waiving your applicable deductible as well as agreeing to pay the rental car agency for their full “loss of use” and any reduction or diminution of value in the rental car.