Rental car insurance is different from regular car insurance. The rental car insurance should provide three types of coverages – Collision, Liability and Comprehensive. The liability insurance will provide coverage for damage caused to other people’s vehicle or property and also to bodily injuries suffered by other people up to the limits of the personal policy. When the rental car is damaged in an accident, Collision insurance will cover the same. Comprehensive insurance will cover damage of the vehicle not because of accident but because of theft, vandalism, riots, etc. In most of the states in the US minimum liability insurance is mandatory for rental cars. It will provide coverage for property damage and bodily injury. Though Collision and Comprehensive insurance policies are not mandatory for rental cars it is up to the owners of the rental cars to ensure sufficient coverage for their cars and also each one must be aware of his policy limits.
Conditions for coverage by rental car insurance
Apart from the policy limits there are other conditions to get coverage by the rental car insurance policy. When a person who drives the car manufactured by a particular company happens to rent and cause damage to a car manufactured by another company, his insurance company will refuse to cover the entire repair bill. Also, if it is found that the rental car was damaged as a result of negligence or reckless driving, the insurance company will not provide any relief. When theft of car takes place as a result of leaving the car unlocked it will be considered as fault of the person who rented the car and will not be covered. The same is applicable to accident that occurs due to reckless driving.
Collision Damage Waiver (CDW)
The Collision Damage Waiver is the most important benefit of rental car insurance and this waiver is to ensure that the policy holder will not be held financially responsible. The waiver is in fact for responsibility. When the Collision Damage Waiver is purchased the rental company will have no rights to charge the policy holder for damage of the car. In the absence of CDW, the company has the rights to make the person who rented the car to pay for even the minor scratches or dents. When there are major repairs, the car company will hold him responsible for all the costs as well as fees. Those who depend on their personal insurance policy, credit card or a third party for the coverage will be held responsible for the entire damage. Subsequently they have to file the claim and try to get the reimbursement on a later date.
Those who plan to rent a car may consult an auto insurance agent in advance and should find out whether their personal policy can provide sufficient coverage to the rented vehicle. In case it can’t provide sufficient coverage, one may try to make necessary changes to their personal policy to ensure that sufficient coverage is provided.