Q: When do I need to add a car to my Auto policy?
A: As soon as you take legal ownership of the car or when it is registered with DMV, whichever comes first. It is extremely important to have your insurance effective the same day or earlier than you register with DMV to avoid fines and license suspension.
Q: Am I covered if I rent a car, and should I buy the insurance the rental company offers?
A: The answer is not so easily given. If you currently have an auto policy with liability limits acceptable to the rental car company, and you are renting a car for personal use, then you’re probably OK as far as liability coverage goes. If you are renting a U-haul or or other types of trucks, or if you are renting a pickup or van for business purposes, then you should probably talk to your agent because you probably will NOT have coverage under your personal auto policy. In these cases, you should purchase both the CDW and liability coverage from the rental company.
Whether or not the car itself is covered and whether you should buy the Collision Damage Waiver offered by the rental car company gets a little trickier. If you carry comprehensive and collision coverage on one of the vehicles insured on your auto policy, then this coverage should extend to the rental vehicle.
There are however, some compelling reasons to purchase the CDW from the car rental company. I could go into the reasons here, but William Wilson, the Director of Education of the Independent Insurance Agents of Tennessee, has done a great job outlining the Top 10 Reasons to Purchase the Collision Damage Waiver When Renting a Vehicle. I’d recommend reading this before renting a vehicle, and you agents out there might want to print out a copy to keep on hand the next time you are asked about it.
Several Final Caveats
Make sure you read the CDW you sign at the rental company. Many CDW’s will only provide coverage under certain restrictions. Some common restrictions include:
Only listed drivers are covered. Make sure you tell them about everyone who may drive the vehicle, and then don’t loan it out. A good rule of thumb to remember here is: “If you don’t own it, you can’t loan it.”
Geographical restrictions: ie.- you’re not covered on that long winding road that goes up between the mountains on the Big Island of Hawaii and similar dangerous passages. The only options here are: 1.) Don’t drive there or 2.) Go ahead and do it anyway (like I did), and use your own policy if anything happens. (It was a nerve-wracking, yet breathtaking drive, by the way).
Also, on your own policy, be sure to find out who is covered when renting a vehicle. Oftentimes, it is the NAMED INSURED, or a “family member” who is covered when renting a vehicle. Your resident girlfriend or boyfriend may be listed as a driver on your policy, but they probably won’t have coverage for rental vehicles. The same would go for ANY resident non-family members in your household.
As always, talk to your insurance agent about it. Make sure you tell him/her exactly what type of vehicle you are renting, what it will be used for, and who will be driving it. Also, be sure to call them sooner than 1 hour before you are leaving for the airport. This can be a complicated matter, and they may need to do some quick research to give you an accurate answer.