Rental car insurance may not cover the entire vehicle. Here’s what you need to know about car rental insurance policies.
Renting a car can be a great alternative that sits between public transportation and the financial burden of owning a car. You’ll get the most out of the vehicle when you need it, without having to worry about maintenance, upkeep or even washing your car.
You don’t need to have auto insurance before renting a vehicle. Instead, your rental agency will ask you to purchase a car insurance package that goes into effect for the duration of your rental period.
Here’s what you need to consider when registering.
1. Beware of excess
Yes, when driving a rental car you should probably watch out for excessive behaviors like hammering RedBull cans and entering a staring contest with your friends while blasting your favorite EDM tracks. But what we really mean is your car rental insurance deductible.
Auto insurance policies generally have a deductible, which is an amount that you will need to cover before making any claims.
To illustrate: Suppose your rental insurance policy has a deductible of $ 1,000. So if you slide to the side and lose a side mirror that costs $ 150 to replace, there’s no point in making an insurance claim.
In fact, you will have to pay up to $ 1,000 in repair costs (ie the deductible) out of pocket before your insurance pays the rest of the bill. In this case, you only pay $ 150, which is well below the excess amount.
However, if you find yourself in the back, for example, and the repair bill will cost you $ 3,000, please claim your insurance. This way, you will only pay $ 1,000, while your insurer will cover the remaining $ 2,000.
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2. Beware of “double” or “multiple” excess
No, we don’t mean to overtake that Red Bull and decide it’s a good time to test the top speed of the car you rented, but rather how many times your deductible could be applied.
You see, auto insurance can be roughly divided into two parts: coverage for you, the driver, and coverage for third parties, like your buddies having an impromptu wrestling match in the backseat.
Some auto insurance policies apply a deductible on both portions (ie, the âdeductible separatelyâ). How does this work? Suppose you had a pretty serious accident which resulted in a damaged car door and a broken wrist for your friend who was riding with you.
As the driver of the rental car, you are now responsible for repairing two sources of damage:
1. Car repairs
2. Your friend’s hospitalization and medical bills
Now, if your insurance policy adopts a âdouble deductibleâ format, you will have to pay the deductible twice – once when you pay the car repair bill and once when you pay your friend’s medical bills (ie. assuming he files a claim against you).
Depending on the amount of the deductible on your policy, this could end up costing you dearly.
You can handle this in two ways:
1. Opt for a lower deductible, which will result in a higher rent
2. Choose a policy with a single deductible that applies to the total sum of all damages suffered against you.
3. Make sure to name all the co-pilots
If your friend or relative will be driving the rental car at some point as well, be sure to check them in when purchasing your auto insurance.
While this does push up your insurance premiums – especially if your co-drivers are young men with less than two years of driving experience – it’s far better to swallow it and pay.
This is because if an accident occurs while an uninsured driver is driving, your auto insurance is automatically canceled, leaving you without any coverage. Depending on the severity of the incident, it could be financially catastrophic or even ruinous.
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4. Cross-border travel may not be allowed
If you plan to cross the border to another state or country, you must notify your insurer when applying for rental insurance.
This is because, by default, auto insurance only applies when you are driving in local territory and can be canceled when you cross borders.
Plan your route carefully and let your insurer know so they can arrange the appropriate insurance coverage for you and the vehicle.
5. You may not be eligible for rental car insurance even if you are a qualified driver.
Some car rental companies have strict criteria for who is allowed to rent their cars. Some of these include age limits (young drivers can be disqualified), the number of years of driving experience, as well as the type of license.
In fact, it’s common for car rental companies to reject P-plate drivers.
If you plan to drive while on vacation in a foreign country, it helps to have an International Driving Permit (IDP).
This diving license contains driving terms in multiple languages, which makes the rental application process easier in non-English speaking countries.
ALSO READ: So you had a car accident. Here’s how it will affect your insurance policy
6. Don’t overlook the theft / loss damage waiver
Traffic accidents aren’t the only thing you need to worry about when driving a rental car. Your vehicle could be stolen or lost!
As the registered driver of the vehicle, you are ultimately responsible for it while it is in your possession.
This means that if that fancy BMW you rented for your cousin’s wedding was stolen while the wedding entourage was busy negotiating to get into the bride’s house, you are responsible for the financial loss.
To avoid this nasty situation, check that your rental insurance includes an exemption in the event of vehicle loss or theft. You will need this waiver to save yourself from financial liability for the loss of the vehicle.
7. Don’t forget the windshield and tires.
It sounds strange, but your rental car insurance may not cover the entire vehicle. Specifically, the windshield and tires may not be included in your policy.
This means that if your car’s tires are flat or the windshield is smashed during an attempted break-in, you could be held liable for the entire damage if your policy does not cover both of these.
This is probably because tire punctures or cracked windshields are quite common phenomena, so many insurers leave them out in order to reduce their overall premiums.
But if you’re not willing to take the risk of paying for damage to these two components, make sure your policy coverage includes them.
ALSO READ: Everything You Need to Know About the No Claims Auto Insurance Discount
This article first appeared in SingSaver.com.sg.