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Car Rental Collision Coverage

14 April 2011
Car Rental Collision Coverage

This coverage provides for the cost of repairs or replacement (up to the policy limit) due to a collision or comprehensive damage to a rental car for which the car rental agreement holds you responsible.

Contents (click to jump down)
What does Car Rental Collision cover?
What is not covered
Why your existing auto coverage isn’t enough
Why you should avoid coverage at the rental counter
Your responsibilities in the event of a loss
Important notes about this coverage
What type of policy covers this?
How much coverage does each company provide?
Summary

Let us tell you a story

Cindy and her young daughter Beth were taking a trip to Disney World. Cindy purchased travel insurance protection with car rental collision coverage because they would be driving to and from Disney World and the beach.

After a full day of fun, they returned to the parking lot to discover their rental car had been smashed by another vehicle and badly damaged. Cindy pulled out her cell phone and called the travel insurance company who sent a tow truck to transport the rental car back to the rental agency. The rental agency informed Cindy that the vehicle would be out of commission for at least 10 days, but Cindy wouldn’t have to pay for the loss of use or the damages because her travel insurance plan covered the costs. With a sigh of relief, Cindy called a taxi service to drive them the next day.

What does Car Rental Collision cover?

Car rental collision coverage provides benefits up to the policy limit if a vehicle rented by the insured is lost or damaged due to:

  • a collision
  • theft or acts of vandalism
  • riots or civil unrest
  • natural disasters such as windstorms, hail, or flood
  • fire or explosion

This coverage will pay the lesser of the cost of repairs including rental charges imposed while the car is being repaired, or the actual cash value of the car.

This coverage is primary to other forms of car insurance provided through a credit card or other automobile insurance policy. This means damages will be paid from the travel insurance car rental coverage before claims will be paid by other insurance sources.

What is not covered

This coverage does not provide for losses in the following circumstances:

  • If the insured rents a truck, camper, trailer, motor cycle, recreational or exotic vehicle.
  • If the insured is intoxicated or under the influence of drugs when the damage occurs.
  • If the insured or their traveling companions are engaged in an illegal act when the damage occurs.
  • Act of war, whether declared or not.
  • Personal possessions inside the vehicle.

In addition, this coverage does not extend to provide coverage for damage to another vehicle, structure, or person.

These countries: Mexico, Ireland, and Jamaica, do not accept coverage from outside their own country. If you will be driving in any of these countries, you will (unfortunately) have to purchase a rental coverage plan in that country for it to be valid.

Why your existing auto coverage isn’t enough

While many auto policies extend your coverage when you rent a vehicle on vacation, that coverage usually leaves out at least one important detail: the rental charges imposed by the rental company while the car is being repaired. This is called ‘loss of use’ and it’s almost never included in your existing auto policy because it’s not necessary for your own car back home.

In addition, depending on the age and condition of your vehicle back home and the limits on your policy, the coverage you have with your existing auto policy may not be enough to cover damage to the vehicle you rent while on vacation. If your old Honda back home is worth $4,000, but you rent a new mini van worth $30,000, your existing coverage won’t be enough to cover that mini van if it’s stolen.

Why you should avoid buying coverage at the rental counter

‘Loss of use’ is not always included in the rental policies you can get at the rental company counter. In addition, the coverage available at the rental counter is often much higher than the charges imposed by third-party travel insurance companies. Some travel insurance collision coverage costs $7-$9 dollars per day, which is a lot less than the $15-$18 often charged by car rental agencies.

Plus, at the rental counter you don’t have time to review and understand the limits and exclusions of the policy. With a travel insurance plan, you have the free look period to review the plan and understand your coverage.

Your responsibilities in the event of a loss

The following are the duties and responsibilities typically required if damage occurs to the insured vehicle:

  1. You must make all reasonable and necessary efforts to prevent further damage to the vehicle.
  2. You must report the loss to the appropriate local authorities and to the rental company as soon as possible.
  3. You must obtain any information on the other party (if one exists) involved in the accident.
  4. You must provide all documentation, including rental agreement, police report, and damage estimates to the insurance company.

Important notes about this coverage

  • The policy ends when the rented vehicle is returned or at 11:59 p.m. on the scheduled date of return if the vehicle is not returned
  • This coverage is sold per vehicle, not per person
  • There is no coverage for your possessions inside the vehicle
  • If a loss occurs, you are required to fulfill some responsibilities

What type of policy covers this?

Travel medical plans don’t have coverage for car rentals, but package plans often do. In many cases, car rental coverage is an optional upgrade to the policy.

Some travel insurance policies are specific to rental car coverage as well, but consider checking your credit card benefits too. Many credit cards extend up to $50,000 in rental car collision coverage to their members in good standing.

How much coverage does each company provide?

PlanCompanyPolicy limitDeductible
Vacation Classic *TravelSafe$35,000
Trip Protector Lite *Travel Insured$25,000
Trip Protector Lite Expanded *Travel Insured$25,000
Worldwide Trip Protector *Travel Insured$50,000
Worldwide Trip Protector Gold *Travel Insured$50,000
No coverageTravel Insurance Services
Adventure Travel *Travel Guard$35,000 $250
Sportsman's Travel *Travel Guard$35,000 $250
Tee, Tour, and Travel *Travel Guard$35,000 $250
Car Rental Collision InsuranceTravel Guard$10,000-$35,000$250
My Travel Guard *Travel GuardAmount selected up to $50,000$250
Gold *Travel Guard$35,000 $250
Silver *Travel Guard$35,000 $250
Platinum *Travel Guard$35,000 $250
Basic *Travel Guard$35,000 $250
TravelRite AnnualTravel Guard$25,000 $250
Select *Travelex$35,000
Basic *Travelex$35,000
Business TravelerTravelex$50,000
CompleteM.H. Ross$30,000
Trip Protector PreferredHTH Worldwide$50,000
No coverageGlobal Underwriters
Preferred PlusGlobal Alert$25,000
No coverageFrontierMEDEX
Custom *CSANo limit
Custom LuxeCSANo limit
Business TravelerAllianz$5,000-$45,000
Annual TravelAllianz$25,000
DeluxeAllianz$50,000
Rental Car Damage ProtectorAllianz$35,000

* As an optional upgrade

Summary

  • This coverage is primary coverage, which means it pays before other insurance sources
  • This coverage includes ‘loss of use’ and your current auto policy will not
  • In some cases, the rental car coverage with your credit card will work just as well (and you’ve already paid for that)
  • This coverage does not include loss or damage to personal possessions inside the vehicle
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Damian Tysdal
Author
DamianTysdal

Damian Tysdal is the founder of CoverTrip, and he believes travel insurance should be easier to understand. He started the first travel insurance blog in 2006.

Damian Tysdal is the founder of CoverTrip, and he believes travel insurance should be easier to understand. He started the first travel insurance blog in 2006.