One of the most frequent questions we get asked here at Shaffer Buck is, “Should I purchase the rental car damage waiver or does my insurance cover me?” Our answer is always yes and no.
If you have a car on your current auto policy that carries “comprehensive” and “collision” coverage, that coverage will extend to a car that you rent as a temporary substitute, such as when you need a car on an out of town trip. Your liability coverage will also extend to the rental car the same as it would apply to the vehicles you own. That is the good news, there are however some possible gaps in coverage that you should be aware of.
Gap #1: While your current insurance might cover the damage to a rental car minus your deductible, it will most likely not cover a diminution or loss in value to the rental car. Once the car is repaired the rental car company will try to sell that car at some point in the future. If there is a significant decrease in the resale value of the car due to the fact that it has been in a wreck, the rental car company might attempt to get the difference in cash from you. Your personal car insurance policy will most likely not cover this expense and you will have to pay it out of pocket.
Gap#2: If you are involved in an accident in a rental car that car will need to be repaired, it can take anywhere from a couple of days to a few weeks to repair a car. The rental car company will be unable to rent that car out while it is in the body shop so they may seek compensation from you to make up for their loss in income. This is another area where your personal car insurance policy will most likely not respond and you will be left footing the bill.
Gap #3: If you choose to not purchase the damage waiver and your insurance company covers a loss to the rented vehicle, you will have to pay the deductible that you carry on your personal vehicle, typically $250 for comprehensive or $500 for collision. Depending on the agreement, often times with a damage waiver from the rental car company you do not have to pay an out of pocket deductible in the event of an accident.
In most cases, purchasing the damage waiver from the rental car company will help you to avoid coverage gaps and potential out of pocket expenses. An alternative to purchasing the damage waiver is to check with your credit card company as many companies provide some rental car benefits that can protect you from coverage gaps. See your credit card agreement or contact your credit card company for more information on these benefits