Q. Does my PEMCO policy cover me while driving a rental car?
A. So you've planned your vacation well in advance, arrived at your destination on time, and are ready to rent some wheels so you can get out and enjoy the sights. Then the person behind the counter stumps you with a question: "Would you like to buy our insurance?"
In working with customers each day, the question of how your insurance will cover that rental car is one of the most common I receive. Assumptions can range from "not at all" to "everything will be taken care of," but since the real answer lies somewhere in the middle, let me provide some clarity so you can be prepared the next time you're asked.
The two most common reasons folks rent a car are for pleasure, like when you're on vacation, or as a temporary replacement, such as when your car is in the shop for repairs. If you rent a vehicle for pleasure, it will enjoy the broadest protections you've purchased on your policy. In that situation ask yourself this question: "Do I want more protection on this rental than I do for the best-covered vehicle on my policy?" If so, consider buying the extra insurance.
However, if you're renting a car to temporarily replace one of your vehicles, then it will receive only the coverage you carry on the car it's replacing.
For example, if you take your 1987 Oldsmobile Cutlass into the shop for maintenance and pick up a 2014 Toyota Corolla from the rental agency in the meantime, the Toyota would only have the coverage you carry on the Cutlass. In this situation you can ask a similar question as above, but with a subtle yet important change: "Do I want more protection on this rental than I do for the car I took to the shop?" Again, if the answer is yes, then you should consider buying the extra insurance.
And no matter why you're renting the vehicle, there are a couple of things that are not covered in any situation: loss of use and administrative fees.
Let's say you have a minor fender-bender in a rental car. The rental agency may charge you for the time it's in the shop (loss of use) and possibly for costs associated with their handling the claim (administrative fees). Most rental agencies offer add-ons to protect against these costs, because they know that personal auto policies generally don't cover them.
Also be aware that your PEMCO policy covers you in the U.S., U.S. territories, commonwealths, possessions, and Canada. If you travel anywhere outside those areas you should ask your travel agent or car rental agent about your insurance options.
And last, what about renting vehicles in situations I didn't address here? Less common situations could be renting a car while on a business trip, renting a U-Haul or other commercial-type vehicle, renting a backhoe or other heavy equipment, or renting a vehicle that other individuals will drive. Coverage will vary in each of these situations, so contact PEMCO or your agent for additional details.
See also, Something happened to my car. Will my policy pay for a rental car?