I understand that “full coverage” can be a confusing term in itself. For purposes of this discussion, “full coverage” means you have liability, collision, and comprehensive insurance. Liability may travel with you to the rental counter. Collision and comprehensive often won’t, if the vehicle is a luxury or exotic car. So before you answer the question “Do you want to buy our insurance?” with a resounding “Nah,” it’s wise to check with your agent about your own policy exclusions.
Your credit card and auto insurance can leave out several types of rental cars. Your card’s rental coverage also might have a max for the vehicle’s value that excludes expensive cars. Some auto policies cover your liability in a rental car. But, your collision and comprehensive coverages may not. If you’re renting a luxury or exotic vehicle that isn’t covered by your policy or credit card, you may want to get the rental company’s insurance.
Let’s say your policy does cover the vehicle. If you’re involved in an accident and there’s damage to the rental car, your rates could go up with your insurance company. If you have to file a claim to cover the rental company’s losses, you’ll have to pay a deductible. Also, you could face a rental loss of use fee if the car is damaged and they can’t rent it out. All this may be avoided by buying the rental company’s coverage.
If your credit card does provide rental car coverage, it’s often secondary, meaning it will cover you after other insurance (such as your personal auto insurance) applies. If your insurance company covers the damage to the rental vehicle, your credit card could cover the deductible you owe. Find out from your card issuer what rental coverage is available, whether it’s primary or secondary, and whether there are limitations or exclusions. Some cards have lots of restrictions, especially when it comes to certain car classes, such as luxury or exotic cars.
Now let’s say you chose a high deductible of $1,000 or more on your own policy. You’ll want to ask yourself if you’d want to pay that kind of money if you damage an expensive rental car. If you choose to purchase the rental car company’s collision damage waiver, you can avoid paying a huge deductible if there’s damage to the rental car.
New York Residents
New York state doesn’t allow rental car companies to charge you for loss-of-use fees. This means if you damage a rental car, you won’t pay extra for time the company’s unable to rent out the vehicle because of the damage. And if the damages or loss exceed the car’s fair market value, the rental company can’t hold you responsible for the difference.
Suppose you’re renting a car in New York and you didn’t purchase the rental company’s insurance. If there’s a covered loss with the rental car, you can send the claim to your insurer. The rental company can’t put a damage hold on your credit card or charge it before a court judgment.
If you’re renting a vehicle in the U.S. or Canada for 30 days or less and your auto policy’s in New York, then you don’t need to buy a collision damage waiver (CDW) or loss damage waiver (LDW) from the rental car company, even without collision coverage. You should still check with your insurance company before declining the rental company’s coverage.
In New York state, CDW and LDW prices are capped for rentals of 30 days or less, but the cap only applies to cars worth up to $50,000. Since many exotic vehicles can cost well over this amount, the cap won’t help you there.
There’s another scenario in which you might want to buy rental car insurance: If you only carry minimum liability limits. In New York, car owners have to purchase at least $10,000 in property damage liability coverage. You don’t want to risk paying out-of-pocket after a serious crash with a high-end rental car.
Let’s say you carry more liability coverage than the state minimum, but you’re going on vacation and you want added liability protection. The rental company’s supplemental liability insurance (SLI) could come in handy. Check with your insurer about whether they’ll cover you if you need to file a liability claim involving a rental car.
A Luxury or Exotic Rental Car in Florida
Florida law requires at least $10,000 in personal injury protection. Personal injury protection helps with costs for injuries after a car crash. This type of coverage applies no matter who was at fault for the accident. You could get up to 80% of your medical bills covered.
When you drive a rental car in Florida, you should check for the primary-coverage clause. By default, the rental company’s insurance is the main coverage for liability and PIP. In some cases, the rental car company’s contract says you have to provide “primary coverage” for the rental car. Primary coverage means that your own insurance pays before any other insurance in a covered loss. In Florida, that holds only if the agreement’s face says so in at least 10-point type.
Talk to Your Insurer
If you’re thinking about renting an expensive vehicle, talk to your insurer. They can explain what coverages might apply to a rental car and whether they’d cover any claims you file involving it. Check your credit card’s benefits guide for rental cars. Finding out whether or not you’re covered beforehand may save you trouble later. Don’t let a rental car wreck be a deciding factor in your financial future.