Liability insurance on rental cars?

Asked by John from Canada

John:

You’re not alone. According to a 2007 survey by the National Association of Insurance Commissioners (NAIC), almost of half of respondents were either “thoroughly confused or had only a rough idea about insurance coverage when renting a car.”

So let’s clear up this confusion, shall we?

The big reason for the uncertainty is that some people need extra insurance when they rent a car while others don’t. Whether you need additional coverage or not depends on two things: your auto insurance policy coverages and your credit card’s fine print.

The NAIC recommends making two phone calls before you get to the rental counter: one to your current auto insurance company and another to your credit card company. One or both may cover you. They recommend asking the following questions:

Ask your insurance agent: Are there any situations in which my existing auto policy would not cover a rental car?
 
Ask your credit card company: What are the limitations on rental car coverage?

When it comes to liability protection—which covers medical expenses and property damage—ask your auto insurance agent if you’re covered. If so, you can safely skip purchasing it from the rental car company.

Note: If you’re traveling on business, your personal auto insurance policy will probably not cover you. The NAIC recommends asking your employer for guidance before heading out.