You have booked the hotel, packed the bags, and reserved a rental car. Then you arrive at the rental counter and face a familiar question: Do you want to purchase the extra insurance?

Before automatically saying yes — or no — it helps to know what coverage you already have.

For many drivers, a personal auto insurance policy may extend to a traditional rental car used for a vacation or other personal travel. The coverage and deductibles you carry on your own vehicle generally determine what protection follows you into the rental car.

But policies vary, so call your insurance agent before leaving home to avoid an expensive surprise.

Start with your own policy

If you have liability, collision and comprehensive coverage on your personal vehicle, some or all of those protections may apply when you rent a vehicle for personal use.

Liability coverage generally protects you if you cause an accident that injures another person or damages someone else’s property.

Collision coverage may pay for damage to the rental vehicle resulting from a crash, subject to the terms and deductible of your policy.

Comprehensive coverage may apply if the rental vehicle is stolen or damaged by something other than a collision, such as hail, fire or vandalism.

If you carry liability coverage only on your own vehicle and have dropped collision and comprehensive, however, you should not assume damage to a rental vehicle will be covered.

What is the rental company offering?

Rental companies typically offer several types of additional protection.

  • A collision or loss damage waiver, commonly called a CDW or LDW, can relieve you of financial responsibility for certain damage to or theft of the rental vehicle. Depending on the agreement, it may also address charges such as towing, administrative fees or the rental company’s loss of use while a damaged vehicle is being repaired.
  • Supplemental liability coverage provides additional protection if you cause injuries or property damage.
  • Personal accident coverage can provide medical benefits for the driver and passengers, while personal effects coverage can cover belongings stolen from the rental vehicle.

Some of these protections may duplicate insurance you already have through your auto, health, homeowners or renters policies.

Don’t forget your credit card

The credit card used to pay for the rental may provide another layer of protection.

Credit-card rental benefits vary significantly. Some coverage is secondary, meaning it applies only after your personal auto insurance has paid. Other cards may offer different benefits or restrictions.

Before relying on a card, contact the issuer and ask exactly what is covered, what is excluded and what steps are required to activate the coverage.

Rental coverage isn’t the same as rental reimbursement

Here’s another source of confusion.

Rental reimbursement coverage on your auto policy generally helps pay for a temporary vehicle when your own car is being repaired after a covered loss.

That is different from insurance coverage that may extend from your personal auto policy to a vehicle you rent while traveling.

Having rental reimbursement on your policy does not necessarily answer the question of what happens if you damage a rental car on vacation.

Five questions to ask before you leave

A quick conversation with your insurance agent can clarify your coverage. Ask:

  • Does my personal auto policy cover a rental vehicle used on vacation?
  • Do my liability, collision and comprehensive limits and deductibles carry over?
  • Am I covered for charges such as loss of use, towing or administrative fees?
  • Are there restrictions on the type of vehicle I can rent or where I can drive it?
  • Does anything change if I rent through a peer-to-peer service rather than a traditional rental company?

Then check the rental agreement and any credit-card benefits before deciding whether additional protection at the counter makes sense.

The best time to discover a gap in your coverage is before you pull out of the rental-car lot — not after an accident.

Sources: National Association of Insurance Commissioners and Insurance Information Institute.

Amy Harrington Bible is a feature writer for KnoxTNToday, writing a weekly column that offers valuable insights and practical tips to enhance daily life. Amy Harrington Bible owns Harrington Insurance Agency, a company that has offered independent insurance services in the Knoxville, TN area since 1942. Bible carries the legacy of the family-owned and operated business with the skills and experience to meet any insurance need you may have.

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