Do I need to purchase the car rental company’s insurance?
This question is the source of more misinformation and bad advice in the print media and on the television, radio and Internet than any other car rental topic I know of. The number of times that I have read or heard from “experts” that the car rental companies’ insurance is a “waste of money” or a “rip off” only reconfirms my uneasiness regarding information reported in the media. Let me set the record straight!
Florida law states that no rental car company can compel a driver to take their coverage. At the same time, it states that no rental car company has any obligation to rent you a car. (Ah legislators ... don’t you just love them?) In practice, this means that if a rental car company is unsure of your ability to immediately compensate them for damages to their vehicle, they might very well turn you away.
Assuming that you are fully insured for damages to the rental vehicle and for third party liability through your personal vehicle insurance company, this brings forth a slightly different question ... that is, “should I purchase the rental car company’s insurance?” The answer is “maybe” and like all insurance matters, is a bit of a gamble on your part.
Even if you are fully insured, are you prepared to immediately pay the deductible on your policy, should you be involved in an accident? This is frequently required by car rental companies and could put a strain on your vacation funds. They may very well refuse to provide you with another vehicle as well!
Are you prepared for the inevitable price increase in the premium charged by your insurance company if you are involved in an accident in a rental car for which you have not taken the rental car company’s damage waiver?
When the accident occurred, were you in violation of any of the terms of the rental agreement (you know, that document the car rental company gave you with all the microscopic writing on it when you rented the car)? Your insurance company is hoping the answer to this is “yes” so that they won’t have to pay a dime; leaving you to foot the entire bill yourself.
Are you prepared to pay for Loss Of Use of the rental vehicle. “Loss of what?,” you may ask. “Loss of use” also known as “down time,” is a part of virtually every company’s rental agreement that states that you are personally responsible for paying for loss of use of the rental vehicle for every day that it is unable to be rented due to an accident, regardless of fault. “Huh?,” you say, “My insurance company or credit card company doesn’t cover that?” Nope! Somewhere, hidden deep within the legal document issued by every insurance company I have had the pleasure to have known, is a statement saying that they will not pay for “loss of use” of a rental vehicle. That means that you are personally liable for paying for the rental car at the daily rate for every day that it is out of commission. In this case, you better hope that your insurance company comes to a quick resolution of the matter (especially if another vehicle is involved) or you could be paying for your rental car for days, weeks or more after an accident! (Curious; isn’t it, that no insurance company mentions that part when they are selling you the insurance?)
So, should you take the car rental company’s insurance? The answer depends on more than one factor such as the number of days that you are renting a car, your financial situation and whether you are prepared to roll the dice, so to speak. The simple answer is; if it’s a relatively short rental, most definitely! The longer the rental is, the less reward there is versus the risk but; because of Loss of Use, there will always be an element of risk.
There are a few more things that must be stated in order to present the most accurate information possible on this controversial subject:
The term “insurance” is a misnomer, but I have used it on this page because that is what the large majority of misinformed media call the protection offered by rental car companies that protects their customers from paying for damages to their rental vehicles. Rental car companies offer “damage waivers,” which wave the responsibility of customers for paying for damage to the rental vehicles, in accordance with the rules set forth in their agreements. The liability coverage and personal accident and effects coverage that they offer is actual insurance, however.
An unknown provision of the “Transportation Bill;” passed by both houses of Congress and signed by the President of the United States in July of 2005, states that car rental companies are no longer vicariously liable for damages caused to third parties by customers who rent vehicles from them. The customer is now; therefore, responsible for indemnifying any parties that they cause injury to.
When you sign a rental agreement, you sign a statement that you, personally are responsible for any damages to the rental car, no matter how they occurred or who may have been at fault. The rental car company is in no way obligated to work with your insurance company, any other insurance company or any other party for that matter. The fact that they usually do, is a courtesy that they extend to their customers. Legally speaking, they can demand immediate payment for damages up to and including total loss of the rental vehicle from any and all signers of the rental agreement.
As is stated on the very first page of this site (the Orlando Vacation page), I do have experience working in the car rental industry. Further, my wife has been in the car rental industry; working for companies large and small, for more than twenty years. In our combined years of experience, we have never heard of anyone who was involved in an accident with a rental car that did not take the car rental company’s coverage the next time that they rented a car.