Does Your Personal Car Insurance Cover Your Rental Car?


The U.S. Travel Association is predicting a 2.3% uptick in 2010 summer vacation travel. In you’re one of the 51% of Americans who will be taking a summer vacation, you’re probably also among the 80% of will be looking for ways to pinch a few pennies in the process. If your vacation plans include renting a car, you may be tempted to waive the CDW/LDW (collision and loss damage waiver)  the rental car company rep is hammering you to buy. While that can be a smart way to keep 20 to 30 bucks day in your pocket, make sure you’re not being penny wise and mega-pound foolish. Don’t just assume that your personal car insurance policy will protect you. Read the fine print and be aware of these facts about personal car insurance and rental cars.


Personal automobile insurance policies are regulated by individual states and vary from carrier to carrier. While personal car insurance policies can extend damage protection to rental cars, they typically only do so if you have a full coverage policy – also known as comprehensive and collision coverage. If you’re only carrying the personal liability and uninsured motorist coverage that most states require, it will not cover the loss or damage of a rental car.


Even if you do have collision and comprehensive, personal auto insurance, your policy may be limited to the value of the car you own, not the one your rented.


If your personal auto insurance coverage does extend to a rental car, it still may only pay the actual cash value (its published blue book depreciated value), or the cost to repair or replace damage after you meet the deductible. If you bother to read your rental car contract (and you really should), you may find that it requires you to reimburse the full retail value of the rental car. Trust us, that’s going to be a lot more than the actual cash value and you’ll have to make up the difference out of pocket. You’ll probably also face a bump in your premiums next time your policy comes due for renewal.


Your comprehensive personal auto insurance may not cover the rental company’s claim of loss of use of its vehicle while it’s being repaired or replaced. Check your policy to see if it has a Use of Non-Owned Cars endorsement to cover this potentially hefty charge.


Adding insult to injury, even after the rental car you wrecked has been repaired, the rental car company may also claim diminished value because the repaired vehicle won’t have the resale value of a similar unit that wasn’t in an accident. Your personal car insurance will not pay for this so you’ll have to.


What’s the take-away from this? If you’re an infrequent car renter or inadequately insured by your personal auto policy, bite the bullet, buy the CDW/LDW and enjoy your vacation. 

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