As the summer travel season approaches, many clients may be planning to rent a car for their vacation. However, do they truly understand what is covered by their insurance when driving a rental car?
According to a recent survey by the Insurance Information Institute (III), only 43% of respondents were confident that their personal auto insurance would cover them in the event of an accident while driving a rental car. This lack of understanding could potentially leave clients vulnerable to unexpected expenses and coverage gaps.
One of the main reasons for this confusion is that rental car insurance can be complex and varies depending on the rental company, location, and type of coverage selected. In most cases, rental car companies offer four types of coverage: collision damage waiver (CDW), liability insurance, personal accident insurance, and personal effects coverage.
CDW, also known as loss damage waiver (LDW), relieves the renter of financial responsibility if the rental car is damaged or stolen. However, it may not cover all types of damage, such as tire or windshield damage, and may have exclusions for certain types of vehicles, such as luxury or exotic cars.
Liability insurance covers damages to other people’s property or injuries in an accident caused by the rental car. This is typically required by law and may be included in the rental rate or offered as an add-on.
Personal accident insurance provides coverage for medical expenses and death benefits for the renter and passengers in the event of an accident. However, this coverage may be redundant if the renter already has health insurance or personal injury protection through their auto policy.
Personal effects coverage protects the renter’s personal belongings in the rental car in case of theft or damage. However, this coverage may also be unnecessary if the renter’s homeowners or renters insurance policy already covers personal belongings.
It is important for clients to review their personal auto insurance policy and understand what coverage they have when driving a rental car. In most cases, their personal auto policy will extend to a rental car, but it is always best to confirm with their insurance provider.
Clients should also consider purchasing a non-owner liability policy if they do not own a car but frequently rent vehicles. This type of policy provides liability coverage when driving a rental car and can be more cost-effective than purchasing liability coverage from the rental company.
In addition, clients should carefully review the rental agreement and ask questions about any additional fees or coverage options before signing. They should also inspect the rental car for any pre-existing damage and document it with the rental company to avoid being held responsible for it.
In conclusion, it is crucial for clients to educate themselves on their insurance coverage when driving a rental car. By understanding their policy and the options offered by rental car companies, clients can ensure they are adequately protected and avoid any unexpected expenses.
