One of the most frequently asked questions we get at our agency is, “Are we covered for driving a rental car?” or, “What would happen if I am in an accident while driving a rental car?” Our carriers will extend your broadest form of coverage to your rented auto and apply the policy limits and deductibles on your regular use auto. Let’s say you have a $1,000 deductibles, these deductibles would apply to the rental car. However! There are two main things your insurance will typically NOT cover which is loss of use and depreciated value.
What is loss of use? Let’s say you are in an accident while driving a rental car and now the rental car is in the shop being repaired. The rental car company will charge you for the days of “loss of use” meaning, the days they couldn’t get income from renting out that vehicle. The rental car company could charge for this lost income.
What is depreciated value? Let’s say the vehicle you rented was worth approximately $15,000 at the time of rental. Now you have been in an accident and it is only worth $10,000 (hypothetically). Accidents will typically depreciate the value of the vehicle. The rental car company can charge your for the depreciated value from an incident that occurred whil the rental car was in your possession. Example: $15,000-$10,000=$5,000 charge on the credit card you provided the rental car company.
What can you do about it? Ask the rental car company if they have the option to buy back these coverages. Ask for loss of use and depreciated value or just buy the insurance they offer.
Please keep in mind to refer to your agent about the coverages that pertain to your specific auto policy. Like the vast majority of auto policies in our country, your insurance is recognized throughout the U.S., our U.S. provinces (Puerto Rico), and Canada, but not elsewhere.