One of the questions I get frequently as an agent is if one needs to purchase the insurance coverage that’s offered from a rental car company. The answer is no. BUT there are a few gaps in coverage that your primary insurance doesn’t provide coverage for that their policy will.
First, when you go out of town and rent a car, your car will be covered at the highest coverage you have. For example, if you own two cars and one has full coverage and the other has liability only, the rental will be covered with the coverage that you have on the car with full coverage. So if you have comprehensive, collision, rental reimbursement, and towing and labor, all of these coverages extend to the rental car, as well as your liability coverage.
So here’s the gap in coverage.
If you are in a rental and you rear end someone, the damage to the other person’s car and to the rental is covered by your primary insurance. You’ll be provided with a replacement rental car if that is a coverage your policy has on it. But while that rental car is in the shop, the company that owns the car has lost the daily rental fee for that car. That is the gap in coverage. If you rent a car for $50 per day, and the example above happens and that car is in the shop for 10 days, you will be left with a bill of $500 ($50 x 10 days).
Another benefit of purchasing the coverage provided by the rental car company is that it keeps your insurance completely out of the equation. You do not have to file a claim with your insurance company which may decrease the chances of an increase in your premium.
If you’re wondering if you need to purchase the insurance coverage offered by the rental company, the answer is no, but you need to know what may not be covered by your underlying insurance just in case there is an accident while you are renting a car.