Questions about rental car insurance are common, and policyholders often want immediate answers when they are in a hurry to rent a car at an airport or when their vehicle needs repairs. But unfortunately, advising policyholders if they have coverage under their personal auto policy or if they should purchase additional waivers or coverages offered by the rental car company can be complex. Read on to learn more about how to help policyholders understand their rental car coverage and liabilities and how to best advise them.
How to Help Policyholders With Rental Car Insurance Questions
As with many coverage-related questions, the answer about rental car coverage often depends on many variables. Agents may need to understand more of the policyholder’s specific situation, such as for how long will the policyholder rent the vehicle, is the rental replacing a vehicle on the policy that is being repaired, who rented the vehicle and who is driving it, who is named in the personal auto policy as an insured, and more.
Coverage under a standard PAP often follows the policyholder, but not always. If the policyholder is driving the rental car at the time of a loss, some specifics of coverage include:
- The PAP liability coverage extends to a rental car used for personal use, subject to policy limits
- Collision and comprehensive coverage, if carried on the policyholder’s PAP, may extend to the rental vehicle, usually with the same deductibles
- Medpay and PIP (personal injury protection) benefits may apply
- Policyholders may be liable for additional charges for administrative fees, loss of use charges, and diminished value claims
A significant issue may arise when the policyholder assumes their own insurance will cover everything, but that is often not true.
Agents can add value to the policyholder relationship by explaining how rental car coverage works, what protections will extend based on the PAP, what the waivers offered by rental car companies cover, and how policyholders can protect themselves from additional liability when renting a vehicle. The policyholder may need to know about other limitations on their use of a rental car, like not being able to drive it into Mexico or who is permitted to drive the rental vehicle (the named insured’s spouse may have different privileges compared with a friend of the named insured).
Most policyholders use a credit card to rent a vehicle, and many credit cards offer some level of protection for renters. However, those protections vary greatly and depend on many factors, like whether the policyholder used the credit card for the entire purchase, if the policyholder has gold or premium status with the credit card, and what protections were purchased at the rental counter.
There are also third-party rental car insurance policies that policyholders can purchase before heading to the rental car counter from providers like Allianz. These are usually sold as part of a travel insurance policy within the U.S., and are often less expensive than purchasing the waivers offered by rental car companies. The coverage they offer, however, may be duplicative of the policyholder’s own PAP.
Best practices for agents include learning more about how rental car coverage applies in their regions following the PAP, understanding the waivers offered by rental car companies, and describing how coverage may be afforded by credit card companies. Agents should also make sure to document all coverage discussions, including conversations about rental car insurance.
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External links:
- https://www.irmi.com/articles/expert-commentary/demystifying-auto-rental-insurance
- https://www.jdpower.com/cars/shopping-guides/will-your-personal-insurance-cover-a-rental-car
- https://www.allianztravelinsurance.com/travel/rental-cars
