Whether you are on a holiday, need a set of wheels to get around town, or renting a truck to move, you are always faced with the question, “do I need rental car insurance”? Most Canadians believe that their credit cards have automobile insurance included. This is not always the case. Only certain credit cards have car insurance coverage. Before renting any vehicle, if you intend to use the insurance on your credit card, you must first confirm that your credit card in fact has insurance coverage.
Even if your credit card has auto rental insurance, you are only covered for certain things. Generally you are covered for damage to the vehicle, replacement if it is stolen and towing. You are not covered for damage to the other person’s vehicle, injuries to its occupants, injuries to a pedestrian should you strike one, or other third party damaged property. There are no accident benefits for you or your car’s occupants. In order to get coverage for those things you must buy the rental company’s insurance, or have your own car insurance through your own personal vehicle insurer. However, even with these coverages there can still be various coverage gaps and exclusions.
In respect of the credit card insurance, it generally covers only certain types of vehicles. You will not be covered if you rent an upscale vehicle. Often this is expressed in the policy as a maximum dollar value of coverage. Often trucks are not covered at all. When on a holiday, you must be certain that your credit card, and for that matter your own automobile insurer, will cover you where you are traveling. Often coverage is only provided in continental North America. Individuals often think that Mexico, the Caribbean and Hawaii are included, when in fact they are often excluded. You may not be covered if you leave the province, state, or country where you rented the vehicle. If you intend to travel for a lengthy period of time you should check that the policy will cover you for the full duration of your trip. There are often provisions that the insurance is limited to specified short periods.
More often than not, coverage does not extend if you let someone else use the vehicle. It only applies if the card holder/the renter is driving the vehicle. You are not covered if you are impaired. There are often exclusions for driving off road, meaning not being on a paved or designated roadway.
You are not covered under your credit card insurance if you accept the rental car company’s insurance. When renting you need to leave a credit card on file. You need to use the credit card that you reserved and paid for the rental vehicle with, or the card you used to redeem points for the rental for the credit card insurance to cover you. A large deducible often applies to these credit card policies, which may vary from card to card. If you have an accident, you will likely have to first pay for the damage on your credit card and be reimbursed after the fact.
There are many exclusion and exceptions when using credit card automobile insurance. All of the details are in the credit card agreement, so you must read it. You should be very aware of your own personal insurance coverages. Contact your personal automobile insurer before renting a vehicle and find out what coverage you have while renting a vehicle, and confirm that it covers you for your intended usage if you expect it to cover you when you rent a vehicle.
In the event of an accident, you should call your credit card company, the rental company, and your automobile insurance company immediately. Be ready to gather appropriate information in respect of the accident, like the police report, and the other vehicle insurance and driver documents. Take photographs of the damages to the vehicles. This information will be required in order to process your claim. Do not delay reporting the claim as there are often short deadlines.
There are many pitfalls with credit card automobile insurance and car rental insurance. When trying to juggle credit card automobile rental insurance, the insurance offered by the rental car company and your own personal automobile insurance, you may fall into a gap which can leave you without coverage. You do not want to pay for something you do not need (rental insurance can be more expensive than the rental itself). However, you also do not want to risk large damage bills, or personal exposure for any injury claims, which could be financially devastating.
Before renting a vehicle and accepting, or declining, the rental car insurance and using your credit card, be clear on what available insurances there are and you have, and what the exclusions are so that you can be sure you are fully covered for your needs.
If you have any problems or questions, feel free to contact Michael Henry at 416-361-0889 or mjhenry@hshlawyers.com.
