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Rental Car Insurance Information: Be Informed

Know Your Responsibilities Before Renting
If your rental car is involved in an accident, who’s responsible for the damages? That’s a very good, popular and misunderstood question. Is a collision damage waiver necessary? Is it important to have a personal umbrella liability policy in place before renting a car? Contact us for more information about things to know before renting a car.

In the meantime, you may find some of your questions answered below.

What is the collision damage waiver offered by rental firms?
The collision damage waiver is a release of your obligation to pay the rental company if the rental vehicle is damaged, as long as you have complied with all the terms of the rental agreement. Rental contracts vary, but generally they require reimbursement up to the full value of the vehicle rented, as well as loss of use and administrative fees in the event of damage to the vehicle. This could amount to $80,000 or more depending on the vehicle rented.

Do you need to buy the collision damage waiver?
If you do not have a personal auto policy, you should always purchase both the collision damage waiver and the liability insurance supplement coverage offered by the rental company.

If you have a North Dakota or Minnesota personal auto policy in your name, it provides coverage for damage to most, but not all, rental vehicle situations by state law. You should consider purchasing the collision damage waiver and contact your agent before renting a car to ensure your policy would apply to your situation.

• Rental of a motorhome or large truck (for example, a U-Haul truck)
• When renting a vehicle for 30 consecutive days or more
• Rental of a pickup or van for business use
• In order to receive the most comprehensive coverage for damage to the rental car

What are some advantages to purchasing the waiver?

• Even though your insurance may cover the damages, the rental company may bill the estimated damages to your credit card when the car is turned in. This could result in a diminished line of credit for the balance of your trip or interest fees built up during the settlement process.
• At-fault accidents are more likely in unfamiliar cities, driving an unfamiliar car. If the collision damage waiver is not purchased, your insurance company will most likely increase your rates if the accident is considered at-fault.
• Credit card companies are eliminating coverage for rental vehicles. Check with your credit card company before assuming they provide this coverage. Most often the coverage is simply deductible reimbursement. Others pay the damage, and then turn the claim in to your insurance company.

The broadest protection is achieved by:

• Renting from a reputable rental firm.
• Purchasing the collision damage waiver.
• Having a personal auto policy with high liability limits.
• Having a personal umbrella liability policy.

Before renting a car:

• Include the cost of the collision damage waiver when comparing costs.
• Find out how a claim is handled if the vehicle is returned damaged and the collision damage waiver was NOT purchased.
  
  • Will a charge be made against your credit card for the damages?
  • What is the maximum dollar amount you could be liable for?
• Find out how a claim is handled if the vehicle is returned damaged and the collision damage waiver WAS purchased.
  • What actions would cause the collision damage waiver to be voided?
  • Does the collision damage waiver cover comprehensive losses (fire, theft, hail, vandalism)?
• Ask the rental company to email you a copy of the contract so that you have adequate time to review it before arriving at the rental counter. If you send the contract to us, we can review your auto policy and how it applies to this agreement.
• It is also critical YOU read the rental contract carefully so that you do not violate any of its provisions.

When renting vehicles, remember to:

• Bring your auto insurance ID card. Some states require all drivers to have evidence of insurance in their possession.
• Thoroughly inspect the vehicle before you leave the lot. Be sure all previous damage and/or missing parts are listed on the contract.
• If you will be crossing state lines or national borders, be sure to have the rental clerk approve this in writing on the contract.
• Be sure ALL potential operators of the vehicle are approved and sign the rental contract. Be sure all operators have their own personal insurance policy or be sure to purchase the collision damage waiver.
• Carry two credit cards with you if possible so that one can be used for the vehicle rental and another for travel expenses.
• When you are renting a vehicle for more than 30 days at a time, or at regular intervals, be sure to tell us. Your policy should be amended to extend coverage for this situation.
• If you have not purchased a personal umbrella policy, perhaps now is a good time to do so.

Disclaimer: The above information is based on the “ISO standard” Personal Auto Policy in force in most states at the time of publication and typical rental car agreements. Be aware that these contracts may vary from state to state and there may be statutory exceptions (e.g., the State of NY) that may govern. In addition, these provisions can change at any time, so it is important to review the laws and contracts in effect in your jurisdiction at any point in time. Due to the brevity of this information, we cannot analyze every possible loss exposure and exception to the general guidelines above.