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What You Should Know about Insuring a Rental Car


Q: I need to rent a car. Must I have auto insurance coverage?
A: 
Yes. It is illegal to drive in Ohio without insurance. Furthermore, you cannot assume that you will be covered by the insurance policy you have on your own vehicle. Also, even if your liability policy includes rental vehicles, you may also need comprehensive and collision insurance to cover damage to the rental vehicle. There are a variety of ways to cover rental vehicles, but you should assess your own needs and policy provisions before renting a vehicle.

Q: What is a collision damage waiver? Is it the same thing as insurance?
A: 
If you buy a collision damage waiver (a “CDW”), the rental company will not hold you responsible for any accidental damage you may cause to the rental vehicle. A CDW is not insurance, however, and it will not cover you for damage you cause to other people or their vehicles. If you already have comprehensive and collision coverage that covers your rental vehicle, it is probably not worth buying a CDW, since you would be paying twice for a benefit you already have. One exception might be if the rental vehicle is worth much more than your personal policy limits, although  most collision and comprehensive coverages do not have a limit. A high deductible on your personal policy is another reason to consider a CDW.

Q: Are there different kinds of collision damage waivers?
A:
 Collision damage waivers come in different amounts and can be full or partial. With a partial CDW, you will have to pay a deductible, just as with an insurance policy. A full CDW costs more than a partial CDW, but will provide the entire amount of damage protection, with no deductible.

If you don’t have comprehensive and collision coverage on your policy, you probably will want to buy a CDW. Otherwise, you could be liable for damage to the rental vehicle.

Q: Might my credit card cover damage to the rental vehicle?
A: 
Possibly. Some credit card companies provide limited coverage in rental situations. Please check with your credit card company as provisions vary and are subject to change.

Q: Will the comprehensive and collision coverage of my personal or business policy cover all damages presented by the rental company?
A:
 You will have to pay any deductible. Also, most comprehensive and collision coverage will pay for repairs or total loss of a vehicle based on actual cash value (ACV). Some rental companies may seek amounts in excess of ACV. Most policies will not cover administrative fees the rental companies charge. Policies also vary on whether lost rental income is covered for the time the vehicle is under repair.

Q: Will the rental company pursue me for charges not covered by my insurance?
A:
 Possibly. Also, there may be a clause in the rental contract that authorizes the company to bill your credit card for charges in addition to the daily rental cost.

Q: Am I responsible for any pre-existing damage to the rental vehicle?
A: 
No. You are not responsible for any prior damage. You should inspect the vehicle with the rental company representative and note any prior damage on the rental contract before you use the vehicle. 

Q: What is supplemental liability insurance?
A:
 Supplemental liability insurance (SLI) is additional coverage offered by rental companies that are authorized to sell insurance. This additional coverage is usually sold on a cost-per-day basis and is available in a variety of coverage limits. If you purchase SLI and also have an individual or business policy, you will need to review each policy to determine the obligations of the carriers.

Q: Will the SLI or my personal policy cover all drivers of the rental vehicle?
A: 
In most cases, only authorized drivers listed on the rental contract are covered. Check policy provisions.

Q:  What is personal accident insurance?
A: 
Personal accident insurance (PAI) is designed to provide accidental death benefits and pay medical expenses of occupants of the rental vehicle if an accident occurs. Some rental companies offer PAI or a similar product. This is not liability coverage and is payable without regard to who is at fault for an accident.

10/28/2013

Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was prepared by attorney Deborah Zaccaro and updated by Linda Ruse, an attorney with Nationwide Mutual Insurance Company.

Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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