There are more options for renting a car than ever before. In the past, you simply selected a vehicle from one of the many brick-and-mortar car rental companies found at airports, train stations or other locations. Today, technology has made possible other alternatives, including peer-to-peer car services, which enable consumers to rent personally owned cars from others; and car sharing programs in which—for a monthly or annual fee—consumers can pick up a vehicle at a wide range of locations for periods ranging from minutes to days.
While these car rental options mean more choice for consumers, they mean more questions about insurance coverage. Fortunately, it is possible to be properly insured when renting a car without wasting money by purchasing duplicative coverage.
The insurance coverage offered by traditional car rental companies is fairly standardized. However, coverage varies widely amongst other types of car sharing programs. The most important step is to read the car rental/sharing agreement—most companies clearly state what is covered as well as the supplemental coverage that can be purchased.
Regardless of the rental car option, the I.I.I. suggests making two phone calls:
The first, to your insurance company, to find out how much coverage you currently have on your own car. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car (providing you are using the rental car for recreation and not for business).
The second, to your credit card company. Insurance benefits offered by credit card companies differ depending on the company and/or the bank that issues the card, and the level of credit card used (a platinum card may offer more insurance coverage than a gold card). However, most credit card only provide limited coverage, such as covering the deductible if there is a claim.
Consumers renting from traditional car rental companies can generally choose from the following coverages (Note: insurance is state-regulated; the cost and coverage will vary from state to state.):
The insurance offered by these companies is not standardized. It is therefore important to go to the company’s website to read the insurance coverage information carefully. If you have any questions, call the customer service number listed on the website. And contact your auto insurer if you feel you need more information to make an educated insurance coverage decision.
Car sharing programs like ZipCar, generally include insurance costs in the fee. However, if the car is involved in a collision or is stolen, the renter may be billed for a specific dollar amount that is stated in the membership agreement. For an additional cost, customers can purchase a “waiver” to avoid paying the accident fee. Car renters under the age 21 should read the insurance coverage carefully as many programs limit coverage for young drivers to the minimum state required amount of liability. Young renters can look into whether their parents’ auto insurance would cover them for the difference, or purchasing their own non-owner liability policy.
A number of web-based peer-to-peer rental services (e.g. RelayRides) offer both basic coverage and supplemental insurance. The supplemental insurance includes both coverage for damage to the car and liability protection, and provides a choice of coverage amounts and deductibles. Renters who do not purchase the additional insurance are required to sign an agreement stating that they declined the coverage.