Rental Car Insurance

Straight answers to the nagging questions about Rental Car Insurance

You’ve just started your vacation. You’ve arrived at your destination by plane, collected your luggage, and are in the process of renting a car. You’ve given the person behind the counter your driver’s license and credit card, and now you are being asked if you want to buy “coverage “from the rental car company.

Do you need it?

Possibly not, but how can, you be sure? The best way is to be prepared and know the answer to this question before you leave on your vacation.

Why shouldn’t you buy insurance from a rental car company? The person behind the counter is (usually) not a licensed insurance professional. He or she is not conversant with insurance laws and won’t know whether or not your personal auto policy covers you when you rent a vehicle (in most circumstances, it does).

Some rental car company personnel may say you are required to by the coverage (not true) or you will be personally liable for any damage to the car while you’re renting it (most likely, not true).

This Coverage Is Incredibly Expensive

* Fact. While it’s true you could be making a costly mistake if you need the rental car coverage and don’t buy it, you’re also making a costly mistake if you buy it when you don’t need it.

Rental car insurance is incredibly expensive. On a daily basis, which is how it is sold, the rental car coverage can cost 10 to 20 times more than your personal auto policy. If you buy all the coverages offered by the rental car companies, you could easily double the daily cost of your rental vehicle.

So who needs to buy the rental car coverage?

Well, here’s who doesn’t. If you have insurance for your own cars, including collision and comprehensive coverages and have the OPCF liability for non-owned auto coverage, you don’t need the rental car insurance – provided you are not renting the vehicle for business purposes.

If you’re on vacation in Canada or the continental United States, no problem but remember your personal auto policy will not provide any coverage outside these areas. Just say no. If you’re on vacation but planning to do some business, you’re probably OK. But you should talk to your auto insurance broker if you mix business and pleasure on the trips where you plan to rent a car.

* Note. One thing to keep in mind: Your collision and comprehensive coverages on your personal auto policy have deductibles (the amount you must pay before the insurance kicks in). Those deductibles apply to damage to rental cars as well.

What if You Don’t Carry Collision Coverage?

So what happens if you don’t carry collision and comprehensive coverages on your own cars? Many people don’t, particularly if they have vehicles that are at least 10 years old.

* Note. If you don’t have collision and comprehensive, your personal auto policy won’t cover damages to the rental car if it is in an accident, stolen, vandalized, collides with an animal or burns.

So what should you do?

You can risk it, not buy the rental car company’s collision damage waiver (CDW) or loss damage waiver (LDW), and hope you don’t have an accident or encounter anything that damages the vehicle. You’ll save money, but it might not do much for your peace of mind, particularly if you’re driving in a strange city or area.

* Tip. If you’re averse to risk, you probably should buy the CDW or LDW. Some rental car companies offer some options with their CDWs or LDWs. Some come with deductibles, like regular collision and comprehensive coverages, while others provide first-dollar coverage.

What if You Damage Another Vehicle When You’re Renting a Car?

What about damage or injuries you cause to other vehicles and people while you’re driving the rental car? If your personal auto policy includes liability insurance (most states require some level of such coverage), your policy will pay for any damage or injuries you cause to other cars or people – up to the limits of the policy, of course.

* Note. If you are comfortable with the amount of liability coverage you have for your own cars, you don’t need to buy additional liability insurance for vehicles you rent.

If you don’t have liability coverage (if you don’t have a car, you’re probably not going to carry auto insurance) you actually may not need to buy the rental car company’s liability policy, either.

Most states require rental car companies to provide some liability coverage to you at no charge. The limit of the free liability coverage is equal to the state’s minimum liability limits.

Is this enough? Probably not, and certainly not if you cause a serious accident.

The minimum liability limit requirements are something like no more than $15,000 for injuries to any one person, no more than $30,000 for injuries to all persons, and no more than $5,000 for damage to the vehicle(s) you hit. That’s not much at all.

* Tip. If you have any assets to protect, you should strongly consider purchasing the rental car company’s liability coverage, which costs $7 to $15 a day depending on the state and level of coverage you choose. Higher liability limits mean higher daily costs.

If you have any concerns about whether you need to buy the coverages offered by rental car companies, you should talk to your auto insurance agent. Rental car insurance can double your daily rate. That’s a lot to pay for something you don’t need.

 

The more your assets grow, the higher your liability risks are. No matter how well you’ve covered your bases, sometimes things go wrong. A car accident. A guest who slips and falls on your property. A lawsuit. If you don’t have the right coverage, an unfortunate situation can compromise your financial security and put your personal assets at risk.

An excess policy responds when the underlying liability limits of your other policies, such as home and auto, aren’t enough to cover the unexpected costs of a lawsuit or accident.

It is important to note that most Canadian insurance policies carry on average $1,000,000 of liability coverage. This limit can quickly become quickly exhausted and is very frequently limited to North America. The Group Personal Excess policy provided by Chubb Insurance provides up to $5M of worldwide coverage which extends to all dependent member of your house hold and also provides coverage for foreign owned assets.*

* Territorial restrictions apply: Sudan, North Korea, Iran, Cuba, Syria

Personal Liability (Homeowners) for bodily injury and property damage in the minimum amount of $1,000,000 per each occurrence.

Registered and unregistered vehicles in the minimum amount of $1,000,000/$1,000,000 bodily injury and $1,000,000 property damage; or $1,000,000 single limit per each occurrence. Registered vehicles include motorcycles and motorhomes.

Uninsured and underinsured motorist protection in the minimum amounts of $1,000,000 per each occurrence. This requirement does not apply to the provinces of Quebec or Manitoba.

Watercraft less than 8 metres (26feet) and 50 engine rated horsepower or less for bodily injury and property damage in the minimum amount of $100,000 per each occurrence.

Watercraft 8 metres (26 feet) or longer or more than 50 engine rate horsepower for bodily injury and property damage in the minimum amount of $500,000 per each occurrence.

*The above liability limits must be in USD if the asset is located in the United States.

Each participant is covered for a $5 million limit of liability, and there is no annual aggregate on the policy.

 

Your Chubb Group personal Excess Liability coverage provides worldwide automobile rental coverage (subject to a few territorial restrictions), for up to 60 days. You can rent a car while on vacation and have coverage for personal injury and property damage without buying the additional insurance.

 

Yes. At the time of writing this (November 1, 2017) you would not be covered in Iran, North Korea, Syria, Cuba and Sudan. Please check with us for any changes to these territorial restrictions.

What do I do if there is an accident?

Please contact Colley Insurance at 1-888-824-0445 as soon as possible, so we can help you through the claim process.

Need any help!

Office: 519-824-4040
Toll-Free: 888-824-0445
Fax: 519-763-6839
customerservice@tgcolley.com
1 - 34 Harvard Road Guelph,
ON N1G 4V8

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