If I rent a car in CA, do I need to take out the rental agency’s coverage?

If I rent a car in CA, do I need to take out the rental agency’s coverage?



One of the most frequently asked questions we get is about whether our insurance customers need to purchase extra coverage when they rent a vehicle either at home or on vacation.

It would seem that most car rental agencies try very hard to intimidate their renters into purchasing their additional coverage – it’s not mandatory, but if you were to take some of their comments at face value, you might think otherwise.

In reality, it’s a big part of the way they make their money. In fact, the agents themselves likely make a commission on the sale so you might experience a lot of push-back, depending on how motivated they are.

In line at the rental car counter: the pressure is on

So, you’re standing at the counter with a long line of weary travelers behind you as this chirpy rental agent gives you the spiel. You suddenly realize that once you purchase the various types of coverages they offer, your once budget-friendly rental car suddenly doubles—or even triples—in price. What do you do?

How rental car insurance works

According to state laws, rental car companies are required to insure all their vehicles. There is no law on top of that that requires the lessors of the vehicles to purchase additional coverage on top of that.

What they are actually trying to sell you is a collision-damage waiver, and/or a loss-damage waiver – both highly profitable ways that the rental car company makes money. Something very important to keep in mind, these coverages are not insurance, they are optional car rental protections.

Think of this: if you’re getting an $11 per day rate on a rental car, how do you think the company is going to profit? They’ve got to make it up somehow, and these costly waivers are the “vehicle” that keeps them in the black – and you in the dark.

Intimidation tactics are typical

Some agents may try to tell you that you must buy their insurance if you want to take their car, but it’s not true. In the state of California, as well as every other state in the union, you are not obligated to purchase their supplemental coverage – note the language here, because no matter how they slice it, it’s not insurance. At least, not in the legal sense.

When you should purchase the additional coverage

Carrying the minimum personal liability is mandatory if you own a vehicle. If you own a car, you have this insurance already. If you do not own a car, you should probably cave and purchase the extra coverage because you probably don’t have a policy and therefore, you won’t have this. If your policy only gives you a small amount of liability, you might want to purchase additional to boost your coverage, but it’s not mandatory. Keep in mind, however, that if you do get into an accident and the payout is more than $1 million, you’d be on the hook for it.

For work or for pleasure?

If you are using the rental car for personal (non-business related) use, your personal insurance has you covered for liability. If you are using the rental car for work, check with your insurer (or your employer, if they are paying for the rental) to make certain what coverage you do have.

You are covered for whatever your policy covers

As for additional perils, you are covered for what’s in your policy and nothing more. For in-stance, if you don’t have collision or loss on your personal policy, you won’t be covered for it on the rental. In that case, you should probably consider the additional coverage, just to be on the safe side.

Check with your credit card issuer

Your credit card may also provide you with rental car coverage. Check your cardholder agreement or call the card issuer to clarify the terms of your agreement before you travel.

Be prepared before you go

When you are getting ready to travel, check the terms of your policy to make sure you under-stand what you are covered for and what you aren’t. Take a copy of your insurance declaration with you so you can present it if asked. Not having your insurance cert handy and refusing their additional coverage is one scenario in which your rental might be refused.

Travel rental insurance can also be purchased as a short-term, stand-alone product. If you would like to learn more about what coverages are available to you, call us today.

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