Whether you’re traveling for business, heading out on vacation, or your vehicle is in the shop, renting a car is common. One of the most frequent questions we receive is:
“Do I need to buy the rental company’s insurance?”
The answer depends on your personal auto policy and the type of coverage you carry.
How the New York Personal Auto Policy Treats Rental Cars
Under a standard New York Personal Auto Policy, a rental vehicle is generally considered a temporary substitute auto or a non-owned auto.
In many cases, the same coverages you have on your own vehicle will extend to a rental vehicle, including:
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Liability Coverage
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Personal Injury Protection (PIP)
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Uninsured/Underinsured Motorist Coverage
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Comprehensive Coverage
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Collision Coverage
However, the coverage that transfers to the rental vehicle is only as broad as the coverage you purchased on your own policy.
Liability Coverage
If you cause an accident while driving a rental car, your Personal Auto Policy will generally provide liability coverage subject to your policy limits.
For example, if you carry:
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$250,000 Bodily Injury Liability per person
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$500,000 Bodily Injury Liability per accident
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$100,000 Property Damage Liability
These limits would typically apply while operating a rental vehicle.
This is one reason we encourage our clients to carry higher liability limits than the New York minimum requirements.
Physical Damage Coverage
Many consumers purchase the rental company’s Collision Damage Waiver (CDW) because they are concerned about damage to the rental vehicle.
If your Personal Auto Policy includes both Comprehensive Coverage and Collision Coverage, those coverages generally extend to a rental vehicle.
However, your deductible will still apply.
For example:
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You have a $500 Collision deductible.
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You damage the rental vehicle.
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Your insurance company pays the covered damage less your deductible.
What Coverage Gaps May Exist?
This is where many consumers are surprised.
While your Personal Auto Policy may cover damage to the rental vehicle itself, there may be additional charges imposed by the rental company that are not fully covered.
Examples can include:
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Administrative fees
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Loss of use charges
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Diminution in value claims
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Towing fees
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Processing expenses
Coverage for these expenses varies by carrier and policy wording.
Business Travel Rentals
A significant issue arises when renting a vehicle for business purposes.
Many Personal Auto Policies contain restrictions for certain business uses.
If you frequently rent vehicles while traveling on behalf of your employer or operate your own business, it is important to review your coverage before assuming your Personal Auto Policy will respond exactly as it would during personal use.
What About Credit Card Coverage?
Many premium credit cards offer rental car benefits.
However, these programs are often:
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Secondary coverage
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Subject to numerous exclusions
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Limited to specific vehicle types
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Restricted in certain countries
Before relying solely on your credit card benefits, review the program terms carefully.
Should You Buy the Rental Company’s Insurance?
The answer depends on your situation.
You may want to consider purchasing the rental company’s coverage if:
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You do not carry Comprehensive and Collision Coverage on your own vehicle.
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You have a large deductible.
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You are traveling internationally.
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You are concerned about claim handling and potential out-of-pocket expenses.
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You prefer avoiding a claim on your personal insurance record.
On the other hand, many drivers with broad coverage limits and full physical damage protection may already have significant protection through their Personal Auto Policy.
The Bottom Line
While a New York Personal Auto Policy often extends coverage to a rental vehicle, there can be important limitations and coverage gaps.
Before your next trip, take a few minutes to review your policy and understand how your coverage applies. A quick conversation with your insurance professional can help you avoid costly surprises after an accident.
Planning a trip and unsure about your rental car coverage? Contact Brewster Allen Wichert Insurance for a personalized coverage review before you pick up the keys.
