Often times consumers will decline or accept insurance coverages offered by car rental companies without fully understanding the consequences. Before walking into the car rental facility there are a few things you should know to assist in making wise auto insurance choices when renting a car.

Type of Car Rental
First, the supplementary coverages available at the time of rental differ if the car is rented for personal or business use. A business auto policy responds much differently to a car rental than does a personal auto policy.

Car Rental for Pleasure
Before making a decision to accept or decline you should review your personal auto policy to ensure the policy contains adequate liability limits and physical damage coverage to meet the rental company requirements.

Keep in mind that personal auto policies that do not have physical damage coverage (comprehensive and collision), will not provide such coverage on a rented car. In that case, it is wise to accept and pay for the collision damage waiver being offered by the car rental company.

Review Credit Card Agreements: Although credit card companies offer some type of insurance protection when it comes to renting cars, there is no set standard. To understand just how much protection is afforded, it’s best to call the credit company (or companies if there is more than one) to see what they offer. Coverage offered by credit card companies is not usually primary. In other words, they will offer coverage in excess of any existing coverage.

Renting a Car for Business Use
When renting a car for business use, make sure the business auto policy contains non owned and hired car coverage. This coverage is a liability only coverage and will not pick up the cost to repair damages to the rented car. Companies usually address the physical damage exposure in a couple of ways:

Purchase the Collision Damage Waiver: Many companies encourage employees to purchase the collision damage waiver. When signing the waiver, be sure to list the names of all individuals who will be driving the rented car. Not listing the drivers and paying the appropriate fee per driver may void coverage in the event of an accident involving a driver not listed on the waiver.

Credit Card Coverage: Similar to renting a car for pleasure, some credit cards offer coverage for business rentals. It’s best to check with the credit card company to find out what is provided before renting the car.

Collision Damage Waiver

Not to be confused with insurance, collision damage waivers are just that, a waiver. The collision damage waiver absolves the driver from being financially responsible for damage to the vehicle (including theft). It also waives the cost of the rental company’s loss of use while the vehicle is out of commission. These waivers may be voided if the damage was caused by speeding, drunk driving or other risky behavior.

Non Insurance Aspects of the Collision Damage Waiver

Car rental drivers must be mindful of the fact that a waiver is not insurance. Collision damage waivers only cover the cost of damages to the rental car. If a driver gets into an accident that causes damage to another’s car or property, the collision damage waiver will not pickup the cost of the third party damage.