Should you waive collision coverage on your rented vehicle?

This is a frequent question posed from our clients. Here are a few items to consider prior to waiving the coverage. If you are:

1. Renting a vehicle for personal use:

• If you are renting the vehicle for personal use you will need to check with your insurance agent to verify that you have collision coverage on at least one of your owned vehicles and that the coverage will extend to your rental vehicle. Be sure and verify your deductible too as it will apply.
• You may also want to checks with your credit card company. Many credit card companies offer rental collision coverage. Restrictions apply, please contact your credit card company for details.
• Please keep in mind that there may be a "gap" in both of the above options, such as several rental car agreements require immediate settlement of the loss. As most insurance carriers require time to inspect the damage before paying any damages, you may be responsible for any difference in the immediate settlement amount demanded from your rental car company and the amount your insurance settlement. In addition, some rental agreements also may require you pay the full retail value, while your policy is most likely based on an actual cash value basis, therefore again, you would be responsible for the difference. Finally, rental car agreements may also require you to pay loss of use. This means that you would have to pay for the rental revenue lost while the car is being repaired. There is most likely no coverage afforded for this by either your insurance or credit card coverage, so you would be responsible for the entire amount.

Renting a vehicle for business use:

• If you own your own business and are using the vehicle for business purposes, there is most likely an exclusion for coverage under your personal auto coverage. You should have a Business Auto Policy in force that covers hired and non-owned liability (damages you would owe to the another party if you were at fault) as well as hired and non-owned physical damage coverage to cover the rental vehicle. Please keep in mind that any or all of the "gaps" in coverage listed above for personal use may apply to your Business Auto policy as well. Please contact your agent to clarify.
• If you are working for another company and they are asking you to rent a car, please verify with the rental car company who will be responsible for damages. In most cases it should be your employer, however,  in the event that you will be held personally responsible, it is recommended that you NOT  waive the collision coverage as your personal auto policy will most likely not pay for any damages because of the business use.
• Also, if you are leaving the United States, you will want to ask your insurance agent if coverage will be provided while driving  in that particular country.

We hope this article has been helpful in answering the question of should you waive the collision coverage on your rented vehicle. If so, please let us know.