Does My Insurance Transfer to a Rental Car?

After my recent flight touched down in San Diego, my wife was at the car rental desk checking in while I sat with the luggage. My wife began to frantically wave at me, motioning me to come over. Apparently, the service rep had asked if we wanted to purchase additional insurance to cover the Toyota 4Runner we were renting for the weekend.

My wife found herself scratching her head, and figured that because I work for an insurance company that I would know what to do.

Her problem, and one that we actually hear about all the time, was that my wife wasn’t sure if we needed the insurance or not. She asked me, “does our regular auto insurance cover rental cars? Also,” she continued, holding up our credit card, “doesn’t our credit card company provide free rental insurance?”

Since most people don’t have a spouse who works in the insurance industry, I’ll answer both of these questions in the sections below, so that you know whether or not to get car rental insurance.

Does My Regular Insurance Cover Rental Cars?

Each insurance company handles rental cars differently, so be sure to ask your company what coverage you have for a rental vehicle. Some cover rentals, some don’t, and others only cover them in certain situations.

Here at Freedom National, we only cover rentals in certain situations: liability coverage will transfer to a rental vehicle* when it is being used as a temporary substitute because the vehicle listed on the policy is out of normal use.

Common reasons for a temporary substitute include:

• Breakdown
• Repair
• Servicing
• Loss or destruction

If the rental is not a temporary substitute for the above reasons, then no coverage transfers. It’s important to note that Comprehensive and Collision coverage typically do not transfer to a rental vehicle, regardless of the situation.

And with Freedom, there is no coverage for a rental vehicle if you rent it just for pleasure or while you’re out of town.

Will My Credit Card Company Provide Insurance?

A lot of credit card companies want you to use your card while you’re on vacation. To entice you to pull their card out of your wallet, many of them offer Complimentary Auto Rental Insurance.

Here’s how it works if you have a Visa card (we’ll use Visa as an example since they are the largest credit card issuer in the world): If your card offers Complimentary Auto Rental Insurance, then the Visa website gives the following instructions, which you need to follow in order to get covered:

• Use your covered Visa card to reserve and pay for your entire auto rental
• Decline the rental company’s Collision Damage Waiver coverage
• Make sure you rent a covered vehicle (trucks, cargo vans, and luxury cars are typically not covered)

What Coverage Will the Credit Card Company Provide?

It may not surprise you to hear that each credit card company offers different coverages, so be sure to research what yours offers.

With Visa, to continue our example, their Complimentary Auto Rental Insurance DOES cover the following**:

• Physical damage to the vehicle
• Vandalism
• Theft

And DOES NOT cover:

• Lost or stolen personal belongings
• Injury to anyone
• Medical expenses
• Personal liability

So, before you find yourself in front of the rental counter, do a bit of research to find out what your insurance company and your credit card company will cover. That way you’ll know whether or not you need to additional insurance offered by the car rental agency.

*At Freedom National, claims with a rental vehicle open up a coverage investigation, which means that the claims adjuster will review the situation and the policy language to determine whether or not coverage would apply.

**This is an example based on what Visa lists on their website. Refer to your specific cardholder agreement to determine what coverage is actually provided.