As an insurance agent, you probably already know that personal auto insurance usually extends to car rental insurance. You may have even used this fact to help your clients save money when they go on vacation and rent cars. Many car rental companies offer added insurance to their vehicles. After all, many people rent cars not just for when they are on vacation or they may not own cars at all, which means they don't have any type of car insurance in the first place. However, for those who do have personal auto insurance, a basic policy should extend to a rental car they get.
Of course, there are limitation to what a personal car insurance will cover when it comes to a rental car. Your clients may ask you for advice on whether they should get car rental insurance when they go on vacation - do you have the answers to their questions? If not, then read this blog post and find out if your clients should purchase additional insurance for their rental.
The Basic Types of Car Rental Insurance Explained
First, let's look at the basic types of insurance that car rental companies offer:
- Collision Damage Waiver (CDW) - Sometimes called Loss Damage Waiver or Physical Damage Waiver, this type of insurance covers the cost of replacing or fixing the car if it is stolen or damaged. That means that the driver can basically walk away without paying anything if something happens to the car.
- Supplemental Liability Protection (SLP) - This type of insurance protects the driver is he or she injures, maims, or kills anyone while driving the car, as well as damage to property.
- Personal Accident Insurance (PAI) - PAI covers the medical and death benefits to the driver or passengers in the car.
- Personal Effects Coverage (PEC) - This type of insurance protects the driver and passenger's personal property in case they are stolen inside the car.
One thing you should definitely tell your clients is that they are in no way obliged to get any of these and in some states, rental car companies cannot refuse them rental if they don't get it. Of course, that just means that if the car does get damaged or stolen, or if they hurt anyone while diriving, then the rental company will not be liable. Also, don't forget to tell them that if anyone else in their party is planning to drive, then they should also ask about the rental's company's policies on additional drivers.
Recommended Car Rental Insurance
So, now, should your client get rental insurance from their company? The cost of getting additional coverage can run anywhere from $20 to $40 per day. That's a lot of money, especially if they are planning to rent a car for a week or more. Here are the things you can do to help them make the smart decision:
- First and foremost, you should explain to them what their current auto insurance policy covers. Most likely, their policy doesn't cover all the things that could happen to them while they rent the car. However, at the very least, it should be enough to cover Collision Damage Waiver. Most likely, your client will still have to pay a deductible, as well as a loss-of-use charge to the company. Of course, you should also check for your client if they have Rental Reimbursement. In such cases, coverage may only be in effect if the client is using a rental car because their primary vehicle is in the shop for repairs.
- Next, ask your client if their credit card company offers additional coverage. They should be covered if they use their card to rent the car. The renter must decline coverage first though, and in many cases, it's still limited to just CDW. This is a great option for those who want the minimum coverage, but don't have any type of primary auto insurance. However, for those who do have auto insurance, your card's insurance company might consider this as a "secondary" option, which means it will only pay out after your personal insurance policy kicks in.
- Review their situation. Are they traveling for business or for vacation? Will they be driving on dangerous roads or in risky situations? Will they be carrying a lot of expensive personal effects (like computers or cameras)? These are questions that can help them determine which types of covereage they should get (or if they need it at all). Of course, you can't predict the future and what will happen, but it's safer to be protected, just in case.
- Offer additional car rental riders. In many cases, a car rental rider might help ease their minds. And, if they rent often enough or for long enough, this might be a more economical solutuon than paying a per-day fee from the car rental company.
There might be a few things you want to tell your clients about rental insurance before they purchase any coverage:
- A personal policy might not cover them if they are on business. If they are traveling on their company's dime, then they should check with their employer if they have insurance for employees or if they can be reimbursed for the cost of the insurance.
- Improper operation can void waivers. Driving while intoxicated, reckless driving, and other actions that are the result of improper operation can shift all liability to the driver.
- Other types of insurance can cover losses. Does your client have homeowners or renters insurance? Then they may be covered for theft or loss of items in the car. Also, personal liability and umbrella insurance insurance should also cover them if they cause injury to people or damage to property.
- Research the credit card's insurance policy. Aside from just providing secondary coverage, it might not cover all types of cars, like luxury and SUVs, or for rentals in certain countries. Some might limit their coverage to a few days or might not pay for extra fees the rental company may tack on after a claim.
Like most types of insurance, car rental insurance can really help your clients if they are ever in a bind. It's one of those things that's good to have, but hope you never need. However, that doesn't mean they have to blindly buy all types of insurance offered by rental companies. It can get pretty pricey, especially if they are renting for longer periods of time. With some research and advice from their trusty insurance agent, your clients can save money and still have enough coverage to protect them if anything happens.