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Does my Maine Car Insurance Cover Me When I Rent a Car?June 6th, 2010 Noyes Hall & Allen
Summer vacation season is almost in full swing. As a Maine insurance agency, two common questions our clients ask is “does my auto insurance cover me if I rent a car on vacation?” and “should I buy insurance from the car rental company?”
The answer is a bit complicated. It may help to look at the types of coverage that the car rental companies offer. Of course, car rental contracts differ. It’s smart to request a copy of the rental agreement to review ahead of time with your Maine auto insurance agent.
Liability Damage Waiver
Maine auto insurance policies provide protection for liability you incur for injuries or property damage you cause to others within the U.S. Therefore, it’s not usually necessary to purchase a Liability Damage Waiver from the rental car agency since you usually already have coverage under your own insurance. An exception might be if you have purchased very low liability limits.
Collision Damage Waiver
Rental car agencies typically try to sell “Collision Damage Waivers” (CDW) for about $8 to $15 per day (an annual rate of $3,000+ a year) – pretty expensive for car insurance! These waivers are not insurance. In effect, a CDW simply buys a promise from the rental car agency that they won’t make you repair or replace a damaged or stolen vehicle.
If you already carry collision and comprehensive coverage under your own Maine personal auto insurance, your policy will extend to the rental car. You should carefully evaluate your existing coverage and discuss with your Maine insurance agent whether or not purchasing a CDW is appropriate for you.
There may be gaps between the coverage your insurance policy provides and your contractual obligation to the rental company. For example, many car rental companies hold you responsible for the loss of use of a damaged rental car. Many charge you the daily rental rate for every day the car is undergoing repairs (whether they were “sold out” or not). Maine Law requires your auto insurer to cover verifiable loss of use for the rental company up to 30 days. That’s fine as long as the rental company doesn’t claim more than 30 days lost income.
There are other expenses that most auto policies do not cover. One example is diminished value which can amount to several thousand dollars. Consult your independent insurance agent to find out what’s best for your travel needs.
Foreign Travel – You’ll probably have to purchase separate insurance when traveling outside the U.S. and Canada. Some personal umbrella policies may provide liability coverage for rental cars abroad; few will cover damage to the rental car itself. Again, seek professional expert advice from an independent agent before you leave home.
Check the Vehicle
Protect yourself by checking the car carefully for damage – with a rental company employee present – before you leave the lot and when you return it. Request that all prior damages be noted in writing. We’ve heard about car renters being charged for damage weeks after turning in vehicles. If you didn’t have them check the vehicle when you returned it, there’s no way to prove your innocence.
The Bottom Line
Buying the waivers from the car rental company is the safest way to make sure you have no coverage gap. But, you’ll probably want to weigh the cost of those waivers against the additional risk you assume by not buying them.
We’re happy to answer these and other insurance questions for our clients. Call us at 207-799-5541.