Does My Texas Auto Insurance Cover a Rental Car?

You are standing at the rental car counter and ready for that much-needed vacation. Then comes the familiar question: “Would you like to purchase the rental car insurance?”

If you already have auto insurance in Texas, you may be tempted to immediately say no since the liability form your existing policy could extend to a rental vehicle. And before you decline the rental company’s coverage, it is important to understand something that surprises a lot of people. Your Texas personal auto insurance policy can extend liability to the rental car, but it may not cover everything the rental company can charge you according to their contract.

Some personal auto insurance policies cover liability damage to a rental vehicle caused by an accident or theft, while others may have different limitations. The Insurance Information Institute (III) specifically recommends contacting your insurance agent before renting a vehicle because policies differ.

What My Texas Auto Policy will NOT Cover on a Rental Car?

The rental car agreement is a contract between you and the rental company. Your automobile insurance policy is a separate contract between you and your insurance company. Those two contracts do not always line up. Here are some of the things that can create a gap.

-Diminished Value. The rental company may still argue that the vehicle is now worth less because it has an accident history and they will recoup less when tis sold. That reduction in value is often called diminished value. This can be particularly important with newer and more expensive rental vehicles.

-Loss of Use. Suppose you damage a rental car, and it spends ten days in a body shop. During this time the rental company cannot rent that vehicle to another customer. They can charge you for that lost rental income.

-Administrative Fees. Following an accident, a rental company may charge administrative processing expenses associated with handling the damaged vehicle.

-Your Auto Insurance Deductible would still apply in a covered loss for comprehensive and collision

-What If I Only Have Liability Insurance? Your Texas auto policy will not suddenly provide physical damage (comprehensive and collision coverage) because you rented a car.

– Personal Belongings Inside the Rental Car. Your automobile physical damage coverage protects the automobile not your suitcase, laptop or purse.

– Be Careful About Who Drives the Rental Car – Letting someone drive the rental, who is not authorized under the rental agreement can create liability and financial problems that extend beyond the normal auto insurance claim.

-Business Travel. Taking a rental car on vacation and renting a vehicle for business purposes are not always treated the same way. Making deliveries, transporting customers, or using the vehicle for another business purpose, additional exclusions or limitations may apply.

What About Credit Card Rental Car Insurance?

Many credit cards offer some type of rental car protection when you use the card to pay for the rental. That can be helpful and read the details or call the customer support for more information. The Texas Department of Insurance notes that credit card rental protection is commonly secondary coverage, meaning your personal auto is primary. Do not assume your credit card benefits booklet means every possible rental car expense is covered.

Should I Buy the Rental Company’s Damage Waiver?

The rental company Loss Damage Waiver (LDW) or Collision Damage Waiver CDW), is generally not traditional automobile insurance. Instead, the rental company agrees to waive some or all of its right to hold you financially. There is not one answer that is right for everyone. It costs additional money. And it may also provide protection against expenses that your personal auto insurance policy does not cover.

Before You Decline Rental Car Coverage, Ask These Questions

Before your next trip, check your Texas auto insurance policy or call your Britton and Britton insurance agent and ask questions such as:

1. Does my liability coverage extend to a rental vehicle?
2. Does my comprehensive and collision coverage extend to the rental?
3. What deductible would apply?
4. Does my policy cover loss of use charged by the rental company?
5. Does it cover diminished value?
6. Are administrative fees covered?
7. Who is permitted to drive the rental vehicle?
8. Are there restrictions for business use?
9. Are there vehicle type or rental period limitations?

 

Texas Auto Insurance Policies Are Not All the Same

This may be the most important point. No policy in Texas is the same. Even with the same insurance carrier. Endorsements, benefits packages, and add-ons can change the policy.  This is true of homeowners and dwelling and landlord insurance also. Insurance companies use different policy forms, endorsements, limits, deductibles, and exclusions.

At Britton and Britton Insurance agency, we are an independent Texas insurance agency. We work with multiple insurance companies and help our clients understand the differences between policies, not just the price printed at the bottom of the quote.

We have served Texas insurance clients since 1985 and understand that sometimes the small details buried inside a policy become very big details after a claim.

Whether you are navigating I 35 in Austin, heading to San Antonio for the weekend, driving through the Texas Hill Country to Fredericksburg, or renting a car for a trip across the country, understanding your coverage before you leave can save a lot of frustration later.

Ask a local independent agent to do the shopping for you across 20+ carriers. You will understand your policy better by asking us questions, and you will feel more confident when wheels hi the road. Start your quote.

Note: Descriptions of insurance products and packages are meant to offer general ideas only, are necessarily brief, and are subject to policy provisions, limits, deductibles, exclusions, and conditions that can only be expressed in the policy itself. In the event of a conflict, the terms and conditions of your policy prevail. This information is provided solely as an insurance risk management tool. It is provided with the understanding that we are not providing advice or any other professional services. We shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of this information.

 

 

 

 

Sources

Texas Department of Insurance, “Do I need to buy insurance when I rent a car?”

Texas Department of Insurance, Auto Insurance Consumer Information

Britton & Britton Insurance, “What is Full Coverage Auto Insurance?”

Insurance coverage varies by insurance company and policy form. This article provides general information only. Coverage is subject to the actual terms, conditions, definitions, limits, deductibles, endorsements, and exclusions contained in your policy and rental agreement. In the event of a conflict, the policy language controls.