Do I need to buy rental car insurance?

Rental car insurance is just like economics…

The answer is it all depends and what it depends on is specific to you.  Here are some questions you need to ask yourself:

  • Do you have collision and other than collision/comprehensive coverage on your policy?
  • Does your policy automatically transfer coverage from your vehicle to a rental car?
  • Who will be driving the vehicle?
  • Why are you renting the vehicle?  Is it for pleasure or because of a claim?

Is your head spinning by now?  If it is, then it’s time to pick up the phone or email your North Carolina independent insurance agent to ask them these questions and keep reading.

What kind of coverage do you have?

The first thing that you need to check on your North Carolina auto insurance policy is what kind of coverage does it have?  Do you have collision and other than collision/comprehensive coverage?  If you do, then you are one step closer to determining whether or not you need this coverage.

The next item you need to exam is what are you deductible amounts?  Do you have high deductible amounts such as $500 or $1000?  If you’ll need a rental car for only a couple of days is it worth purchasing the coverage that they offer compared to your deductible amount?

Do you have automatic coverage?

This is almost certainly something that you’ll need to call your North Carolina independent insurance agent about because it’s generally not something that is clearly listed on your auto policy.  You need to determine if the coverage you have on your North Carolina auto policy will automatically transfer to a rental car.  Often times there are conditions that will determine whether it does or does not transfer.

Who will be driving the rental car?

There is a huge difference between the named insured on a North Carolina auto insurance policy and a driver on a North Carolina auto insurance policy.  The named insured is the person, or persons, listed as the owners of the policy and they are the ones responsible for the policy.  A driver is a person who drives the vehicle covered by the policy and they are not responsible for the policy.

Think of it this way.  You have a family of four; a father, mother, son, and daughter.  The father and mother will be the named insured’s on the policy and the son and daughter are considered drivers of the policy.

Another factor to consider is renting a car where multiple people will be drivers who have their own individual North Carolina auto insurance policies.  You’ll need to determine how the rental car company handles situations where multiple people are driving and who’s auto insurance will be used.

Why did you rent a car?

There are generally two times people need to rent a car:

  • Because you filed an auto claim
  • Pleasure use (vacation)

Let’s run through a few scenarios together:

  • You filed an auto claim with your insurance company because you rear-ended someone on your way to work.  Your insurance company sets up a rental car for you because your vehicle will be at the body shop for three days.  Since you are a named insured on the policy, then your coverage will automatically transfer.
  • Your son rear-ended someone on his way to school one day.  You file an auto claim with your insurance company and because it is considered a temporary substitute vehicle, then your auto policy will cover the rental car.
  • A family of four goes on vacation together; father, mother, son, and daughter.  Your North Carolina auto insurance policy will cover the father and mother while driving, but not the son or daughter.
  • Your son decides to go on a road trip to see his favorite baseball team play.  He wants to rent a car because he needs a car with better gas mileage.   Because this is not considered a temporary substitute vehicle your coverage will not automatically transfer.

Just tell me what to do…

It all depends upon your specific situation for me personally I purchase the damage waiver and liability coverage offered by the rental car company when I rent a car.  I do this for a few reasons:

  • I’m in an unfamiliar vehicle and that could lead to an accident because I’m not comfortable driving it.
  • Rental car companies can be very picky about the smallest damage to their vehicle.  Damage that you may not be concerned about on your personal vehicle may be considered major damage to the rental car company.
  • The amount that the coverage costs me is less than what my collision and other than collision/comprehensive deductibles amounts are at.
  • It is a huge convenience to be able to tell the rental car company what happened to the vehicle, hand them the keys, and be done with the whole situation.

Overall, you have to make the decision that makes the most sense financially for you and your family.  Is it better to pay the daily cost for the rental car company to be responsible or is it better to rely on your own North Carolina auto insurance policy to provide the coverage? 

I would recommend talking with your North Carolina independent insurance agent when you need to rent a car so that you can discuss your personal situation.

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Joshua Lipstone

Hey I'm Josh! I'm the Vice President of Lipstone Insurance Group. I'm here to help any way I can, so don't be shy. Drop me a line!

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