Insurance is one of the most confusing aspects of renting a car or truck. Most rental insurance companies will urge you to purchase their coverage and insurance, saying that your personal auto insurance policies will not cover you.

However, most personal auto-insurance policies do cover rental cars. Let’s explore how vehicle insurance works when used for rental cars and vans.

How personal auto insurance coverage works with rental vehicles

Most auto-rental agencies would have you believe that your personal auto insurance does not cover your rental vehicle. This often is not true.

Most personal auto-insurance policies will cover rental vehicles under a “temporary substitute” vehicle policy. This means that if you are not driving your primary vehicle, your coverage will temporarily transfer to your rental vehicle.

Yes, that’s correct. Your personal auto insurance will generally cover your rental car.

However, coverage for vans, trucks and “Uhauls” is less clear. For example, some auto insurance policies only cover vehicles weighing less than 10,000 pounds. Others will not cover “panel vans” that do not have windows. In our research, we called several insurance companies. Some companies covered vans and trucks up t0 10,000 pounds, while others did not provide coverage for these vehicles. There’s no conclusive answer, as every insurance company treats this differently.

When renting a truck or van, it’s best to call your insurance company to discuss if your specific situation is covered by your policy.

Will my personal auto insurance cover a rental car when used for business?

This is a gray area, but generally, the answer is yes.

For example, if you a flying to San Francisco for business meetings, your personal auto insurance will cover your general use of a rental car for getting to the hotel, driving to meetings around the city, etc.

However, your personal auto insurance will most likely not cover you when using your rental vehicle beyond typical personal usage. Examples of this include:

• Renting a vehicle specifically to transport equipment or cargo. For example, picking up supplies for your business.
• Renting a vehicle to facilitate business deliveries. For example, delivering pizza or flowers.

Under these business uses, your personal auto insurance will most likely not apply.

Does my credit card provide auto rental insurance?

Some credit cards, such as American Express, will provide a small amount of insurance for rental cars. However, the insurance provided is very narrow.

• The rental insurance typically only insures the rental vehicle. It does not provide insurance for personal damage, healthcare or damage caused to other parties while driving the rental vehicle.
• Credit card insurance will typically only cover standard passenger vehicles. Cargo vans, trucks, full-size SUVs and full-size vans are generally not covered.

When does it make sense to purchase car rental insurance?

There are scenarios where it does make sense to purchase the additional insurance and coverage from the car rental agency:

• You are using the rental vehicle for commercial or business purposes (as mentioned above).
• The rental vehicle weighs more than 10,000 pounds or falls under a vehicle class that your insurance does not cover(such as large trucks or vans). 
• You have recent claims against your personal auto insurance. Additional insurance may prevent another claim and help you keep your insurance in good order.
• You aren’t comfortable driving your rental vehicle. Especially when renting moving vans or trucks, the probability of a scratch, dent or even an accident increases substantially. Spending $25 for insurance to avoid filing a claim on your personal insurance may be a smart decision.

Why do car rental agencies tell me that my insurance doesn’t provide coverage?

The secret in the car-rental industry is that agencies make their profits on “counter” products. These are products they sell to you after your initial vehicle rental. These include items such as:

• Insurance
• Gas refills
• Driving mileage
• Packing boxes
• Furniture pads

Most rental agencies will try to “hook” you by offering the lowest base rental price, but then hitting you with fee after fee to actually use the vehicle. These “upsells” are how they turn a profit and are able to advertise vehicles for low daily prices.

Key takeaways

• Your personal auto insurance most likely covers standard passenger rental vehicles.
• If renting a van or truck, check with your insurance agency to determine if you are covered.
• If you’re using the rental car for work purposes, your personal auto insurance won’t apply.

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