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Should I get rental car insurance? Am I already covered?

WE'VE ALL BEEN there--weary business travelers eager to reach our final destination without additional hassle when a rental car agent tries to get us to buy liability and collision damage coverage. Thankfully, for savvy business travelers, a preferred access kiosk lets us bypass the long lines and go directly to our cars, and, in the process, avoid the insurance sales pitch at the counter.

Have you ever found yourself asking: Just what is covered? Do I really need it? Won't my company's insurance policy pick up the liability if I get in an accident? Don't I have some coverage from my credit card company?"

Just what is covered and do I really need it? According to the Insurance Information Institute, for between $10 and $20 per day, the collision damage waiver offered by your rental car company will cover theft or damage to the rented vehicle. For $9 to $14 a day, your rental car company will provide $1 million in excess liability coverage above a given state's required minimum. Both of these policies, and especially the excess liability coverage (given large verdicts in some districts) may be particularly important for business travelers who do not own their own personal vehicle and do not have a personal auto policy.

Your personal auto insurance is deemed "primary" by insurance companies by convention, even when you are traveling on business. This means that your personal car insurance policy will respond first until its limits are used up. Advice: Use your company-issued credit card, not your personal credit card.

Some companies elect to make their business auto policies "primary" for liability coverage, covering employees traveling by car (owned, borrowed or rented) on company business. Advice: Ask your agent if you have elected business auto policy as "primary" for employees. While you're at it, you might ask if you have "Employee as Insured" for the occasion when an employee uses his or her own vehicle on company business. This add-on will provide primary coverage to employees traveling on company business in their own vehicles.

Watch out for the "loss of use" trap. Most business auto policies provide minimal coverage for a rental car company's loss of income when you wreck their car. The standard business auto policy provides $20 per day in coverage up to a maximum of $600. Unfortunately, many renters are learning the hard way that $20 per day does not provide adequate coverage, especially when the rental car agency hands you a bill for $60 or $70 per day the vehicle is out of service. Advice: Ask your agent to make sure you have "optional limits--loss of use" added to your policy to increase your limits at little cost to your company

Don't I get some coverage from my credit card corn party? Each credit card company has its own coverage form, but a good rule of thumb, is that platinum or signature credit cards provide more coverage than gold or standard issue cards. Even the best platinum programs usually provide "excess" coverage, which means your personal or business auto policy will pay for claims before the credit card company cuts a check to compensate you.

Coverage provided by credit cards is for physical damage only. Personal liability is not included in the free coverage! Advice: use your platinum credit card to book your rental car--after all, the coverage is free, though it might not amount to much. Also, discuss your business/personal auto and umbrella policy limits with your insurance professional to make sure you are covered for liability.

Since few people understand what is really covered by their personal, business and credit card-provided insurance policies, most business travelers assume they don't need rental car agency-provided insurance ... but here is where they really get you--after the accident, you find out you are not covered or only your small personal policy limits apply to pay for damage and liability.

Jeff Laborsky is a commercial insurance specialist with Tobias Insurance Group in Indianapolis.
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Title Annotation:ADVICE: INSURANCE
Author:Laborsky, Jeff
Publication:Indiana Business Magazine
Date:Jan 1, 2007
Words:661
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