Rental Car Insurance in Kokomo, Indiana
When renting a vehicle, do you automatically buy rental car insurance? Did you know that your rental car may already be covered through your auto insurance policy?
When you're thinking about renting a car, be sure to talk to your Killingbeck Insurance Specialist to see how much coverage you have on your personal auto policy. If you are using the rental for pleasure, the coverage and deductibles you have on your personal automobile may extend to your rental car. If your personal auto insurance policy includes collision and comprehensive coverage, then this should cover the rental car within the limits of your current coverage. Also, if you pay for the rental car with a credit card, your credit card company may include a rental car loss damage waiver as a cardholder benefit.
The exception to this rule is the Collision Damage Waiver (CDW), which is an extra daily fee that covers 'loss-of-use' should you become involved in an accident. Some companies bill you loss-of-use fees for the downtime before the vehicle is repaired, but the rental car guidelines of the National Association of Attorneys General recommend charging only for the actual time in the shop. Some states also set limits for loss-of-use charges. The CDW covers the time the automobile is being repaired and cannot be rented out, which costs the rental company money. CDW coverage is not typically included in your personal car insurance policy, so it may be a good idea to pay the daily fee for the collision damage waiver.
Weigh the Risks
Although loss-of-use fees can add up, they amount to pennies compared to a diminution-of value charge. This type of fee is designed to protect a rental company from losing money on a badly damaged car. Because of laws requiring sellers to disclose if a car has frame damage, these vehicles can sometimes only be sold for their salvage value.
If a rental company doesn't set rates for diminution-of-value, its damage-recovery company probably will. Some companies use a percentage basis, while others use a mathematical formula to calculate diminution-of-value fees. The average is 25% of the total cost to repair the car. So if you or someone else damages the front end of your rental car, and the repair bill exceeds $10,000, you could incur a diminution-of-value fee of $2,500.
But many rental companies won't repair a vehicle with that amount of major damage for liability reasons. If this is the case, the company may sell the car for its salvage value and pass the loss on to the person who rented it. Say you rent a vehicle worth $20,000 and cause $10,000 in damages, and it is sold as salvage for $7,000. your insurance will only pay for the $10,000 in damages, which means that you'll have to come up with $3,000 out of pocket to cover the difference.
Why You Should NOT Buy Insurance From a Rental Car Company
For one, the person behind the counter is usually not a licensed insurance professional, and is not familiar with insurance laws and won't know wether or not your personal auto policy covers you when you rent a car. Additionally, some rental car company employees may say that you are required by law to buy insurance, which is not true, and that you will be personally responsible for any damage to the car while you're renting it. In most cases, this is also unlikely to be true.
To Buy Or Not To Buy
While it is true that you could be making a costly mistake if you need rental car insurance and don't purchase it, you could be making an even bigger mistake by buying it when you don't need it. To assess your own status, take the following steps:
- Check your personal auto insurance policy: If you own a vehicle, talk to your Killingbeck Insurance Professional. In most cases, the same coverage and deductibles you carry on your car will apply to a vehicle you rent for pleasure. But be advised: If your policy provides minimal coverage, you may need to compute the value of the loss or damage of a new car and decide if you need to supplement it.
- Read the fine print in your credit card policy: This can get a little complicated because coverage can vary from card to card, as well as between the various banks and credit companies that issu the cards. Always be sure to inquire about inclusions, because certain expensive or exotic vehicles may not be covered. Additionally, vehicles rented outside the United States may not be eligible for this type of coverage.
What are my options?
If you've been unfortunate enough to have determined that your personal auto insurance policy is not fully adequate to cover your rental car, you'll be faced with a variety of products to purchase. the following types of optional insurance are typically offered by most major rental car companies:
- Supplemental Liability Insurance (SLI): Usually costing between $7 and $9 a day, SLI provides excess liability coverage up to $1 million.
- Personal Accident Insurance (PAI): Covers your expenses from an accident with a lump sum payment, a daily or monthly amount, or a payment from loss of life from an accident.
- Personal Effects Coverage (PEC): Covers loss or damage to many types of personal belongings such as baggage, cameras, and other personal effects. PEC protects your belongings and those in your travelling party 24-hours-a-day throughout the rental period. PEC coverage typically costs between $2 and $5 per day.
Got Questions? We're Here to Help!
If you have any concerns about wether you need to buy these types of coverages offered by rental car companies, you should consult your Killingbeck Insurance Professional. Rental car insurance can nearly double your daily rate, and that's a lot to pay for something you don't need. Fill out our confidential contact form or call us at (765) 452-8000 to speak with our insurance specialists today.