Rental Cars

Vacation Rental Cars

Renting a car while on vacation prompts all sorts of curious questions. When you rent a car outside the US, Territories, Possessions, and Canada you must ALWAYS buy the insurance coverage from the rental agency. Your personal auto policy has a “territorial” limit to the areas mentioned above. Outside of that territory you have NO coverage.

Renting a car while on vacation within the coverage territory, there are four areas on potential exposure. Two of these are covered by your car insurance. Two are NOT and cannot be purchased under your car insurance.

Liability Coverage 

This protection extends from your car insurance to a rental car. So, if you back into a pole or another car, the damage will be covered under your car insurance.

Physical Damage

This includes collision and other than collision coverage. (If you do not carry these coverages, there is obviously no coverage extension.) If you break the windshield of a rental car, you glass coverage will fix the windshield subject to your car insurance deductible.

Loss of Use

If your rental car is stolen, the rental agency will assess you the lost value of the rental. The car is gone. They cannot make then rental income and you are responsible for this loss and it is NOT covered under your car insurance.

Diminution in Value

Rental car companies buy what are called “program” cars. They buy 100 Chevy Malibus with the knowledge they will rent them for two years and at the end of that time they can sell them for a fixed number UNLESS the car is in an accident. So, they planned to be able to sell them for $10,000, but since the car was in an accident, they can sell it for only $8,000. You are responsible for the $2,000 loss and this is NOT covered under your car insurance.

  • You are out of the coverage territory
  • You are on vacation with others and you and other people will be driving the car. Do not expose your coverage to the actions of another
  • You are driving in challenging weather conditions, i.e. bad winter weather.
  • You would rather be able to go on vacation and not worry about a problem with a rental car.