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Summer Vacation Checklist: Suntan Lotion, Beach Towel, Flip Flops, Auto Insurance Policy … Auto Insurance Policy?

Remembering all the essentials is one ritual that we all go through before heading off on vacation. Pulling out of the driveway with tickets in hand, we go through the mental list of the things we were supposed to do before we left. Toothpaste packed? ... yup. House locked? ... yup. Do I have enough underwear? ... yup. Did I check with my independent insurance agent or my insurance company about how whether my auto policy covers me in the rental car? ... uh oh!

Not knowing whether or how your personal auto insurance policy covers you in a rental car can be costly. Rental car companies sell waivers that may cover liability (damage you cause to other people or property), collision (damage you cause to the vehicle you rented) and comprehensive claims (stolen vehicle, weather-related damage like that caused by hail and flooding and collisions with animals).

When you buy waivers, the rental car company gives up its right to collect damages from you. But, since buying waivers can nearly double the cost of a rental (waivers can cost between $7 and $25 per day, depending upon the company, vehicle, and type purchased), it's important to know whether you need them.

In a recent survey conducted by the Progressive group of insurance companies (NYSE:PGR) , of those drivers who have rented a vehicle in the past three years, 18 percent said they always buy the waivers at the rental car counter, while 12 percent said they sometimes buy them and 68 percent said they never buy the waivers offered at the rental car counter.

When asked why they buy waivers at the rental car counter, 54 percent of drivers said they do so because they want extra coverage beyond their own policy limits, 32 percent don't believe or know if their current auto insurance policy covers them and nine percent said they feel pressured into buying the waivers by the rental car company representative.

Additional findings of the survey:

  • Fifty-seven (57) percent of drivers who travel for personal reasons always buy the waivers compared to only 49 percent of those who travel for business.
  • Younger drivers are more likely than older drivers to buy waivers at the rental car counter. Fifty-four (54) percent of younger drivers (between the ages of 18 and 24) compared to 16 percent of older drivers (between the ages of 55 and 64) said they always or sometimes buy waivers at the rental car counter.
  • Male and female drivers were equally as likely to report they have purchased waivers at some point while renting a car (30 percent and 29 percent, respectively).
  • Men were more likely than women to not believe/know if their own auto policy covered them in a rental car (34 percent versus 31 percent, respectively) -- they were also more likely to feel pressured into buying waivers at the counter by the rental car representative (11 percent versus seven percent, respectively).
  • Women on the other hand were more likely than men to buy waivers because they wanted extra coverage beyond their own policy limits (58 percent versus 50 percent, respectively).

So, should you buy waivers at the rental car counter this summer?

"It's important that consumers understand what they're already paying for and how it applies to a rental car. That way, they can make a more informed decision about what they may or may not need to buy at the rental counter," said Tom Hollyer, director of product development, Progressive. "If you have 'full coverage' on your personal automobile (comprehensive, collision and liability coverages) you should check with your agent or your company to see if that coverage extends to a rental vehicle. Chances are, it does and if you're involved in a crash with a rental car, in most cases you would be liable only for your deductible on comprehensive or collision coverages, just as you would be in your personal vehicle."

Summer Car Rental Tips

Before you rent a car this summer:

  1. Check with your insurance agent or broker or with your insurance company. Your first step should be to find out if the coverage you have on your personal vehicle provides protection for you in a rental car.
  2. Check with your credit card company. Some credit card companies provide coverage at no charge if you use their card to charge the cost of the rental.
  3. Take your personal auto insurance policy and details of your coverages with you to the rental car counter. You may be asked a question that these papers can answer -- or, if you're in doubt, you'll have your agent's name and phone number readily available.