Rental Car Coverage: What You Need to Know
August 27, 2015
Author: Shawn Swenson, Account Administrator
What is a Rental Car Damage Waiver?
The Rental Car Damage Waiver is a contractual agreement between the rental company and the customer not to hold the customer responsible for damages to the rental vehicle. The optional waiver is generally offered by the day and can cost anywhere from $5-$30 with an average of $20 per day based on the company and the vehicle. Standard auto insurance policies are typically insufficient to cover the physical damage exposure of the rental car. Furthermore, if renters do not carry their own physical damage coverage, the cost of wrecking a rental vehicle could be thousands.
The Rental Car Loss Damage Waiver’s contract outlines several violations which void the contract if the renter breaches. Below is a list of common violations.
- Use by a non-listed driver. This could include a valet parking attendant.
- Use off of a paved service. This includes dirt roads, driveways, or parking lots.
- Use outside the United States, such as in Canada, as well as specified states.
- Failure to use seat belts or child safety seats.
- Failure to close and lock all doors and the trunk.
- Use while intoxicated or under the influence of drugs, legal or otherwise.
Does your Personal Auto Policy cover a rental car? Is it enough?
The Personal Auto Policy or “PAP” is a common coverage held by individual insured. The PAP may provide coverage for any direct damage to rental vehicles. If physical damage insurance is carried under the PAP, the rental may be covered. The current Personal Auto Policy states that in order for the coverage to apply to a non-owned car, the insured need only carry a specific coverage on one car regardless of the number of owned insured cars. The PAP will provide the broadest applicable owned coverage to non-owned vehicles.
For example a PAP insured owns 3 cars. The 3 cars all have different forms of coverage. Even if only 1 of the 3 owned cars is collision covered, then the rental car would also be collision covered. However, the renter is still responsible for certain indirect losses, such as loss of use and towing charges. In the case that the renter has an at-fault accident, they would be responsible for direct damage to the vehicle, as well as certain indirect expenses. The damage waiver would include the indirect expenses, as well as the direct.
Will commercial policies ever pick this up?
The Commercial Auto Policy could cover physical damage for rented autos as long as Hired Physical Damage is purchased. However, it would not cover indirect damage, only direct. Further, the policy would only cover vehicles that the named insured rents, not employees. Therefore, the Loss Damage Waiver provides better overall protection.
 Shawn Swenson |
Shawn Swenson graduated from the University of Iowa with a degree in Business Management. He works exclusively with trucking companies to ensure clients’ risks are covered. Outside of work, Shawn enjoys music, sports, and travelling. |
References:
- https://articles.chicagotribune.com/2012-12-25/travel/sns-201212210000–tms–travelpkctnxf-c20121225-20121225_1_collision-damage-rental-car-insurance-collision-coverage
- https://www.cpcusociety.org
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