There are different ways to insure yourself for damage to or theft of a rental vehicle. The best way to be sure you’re always protected is to add an endorsement to the auto insurance policy on your own car that extends coverage to rentals, often for less than $5 a month.
CTV News recently ran two separate stories about Ontario drivers who were left with huge, unexpected bills when vehicles they were renting were stolen from their driveways. Auto theft rates continue to rise, especially in the GTA, and these two motorists got a first-hand look at the issue. Unfortunately, the problem was exacerbated in both cases because the renters didn’t have the right insurance coverage.
“Many Ontarians are misinformed about what insurance they need when renting a car or truck,” says Scott Logan, Director of Personal Lines at Mitch Insurance. “Some credit cards have coverage, and rental companies offer damage waivers, but many of us decline the damage waiver thinking we have coverage when we really don’t.”
In Ontario, there is an insurance endorsement called an OPCF 27, which extends the coverage on your own vehicle to any car you happen to rent or borrow. You can usually add this endorsement at any time as long as your policy includes coverage for physical damage (collision and comprehensive).
What are the different ways to insure your rental?
When you rent a car in Ontario, the price includes the basic auto insurance coverages that are required by law, but it does not include any coverage for physical damage to the vehicle. If anything happens to the vehicle while it’s in your possession, you are personally liable and the rental company will send you a bill.
There are three different ways to get coverage for physical damage to a rental car:
- Damage waiver – The rental company would prefer that you take their damage waiver, which isn’t really insurance, but essentially absolves you of any responsibility if something happens to the car. Depending on the rental company and the specific vehicle you’re renting, you could pay between $10 and $40 a day for this option.
- Credit card – Some credit cards also offer rental car insurance for free when you use the card to pay for the rental. Coverage is usually limited to $65,000. It’s important to make sure that the entire amount of the rental is paid on that card. If you use a different card or leave a cash deposit, you won’t be covered.
- Your own auto insurance – You can extend the coverage you have on your own car to any vehicle you rent or legally borrow by purchasing what is called an OPCF 27 endorsement. This also extends your other coverages, so if you have $2 million liability or increased limits for injuries, that carries over to your rental. Not all insurance providers include this coverage, so be sure to ask your broker about it. It often costs less than $50 a year.
Avoid confusion with other coverages related to car rentals
When you’re shopping for auto insurance, you’re likely to hear about a number of different options that can be added onto your policy. One of them is the OPCF 20 endorsement, commonly called loss of use. It is also only available if you have collision and comprehensive coverage. With this endorsement, if your car is damaged or stolen, your insurance company will pay for a rental car (up to a dollar limit) during the time when your own vehicle is being repaired, or while you’re shopping for a new one.
It’s easy to think of loss of use as “rental car coverage”, but an OPCF 20 only gets you the rental car. If you want physical damage coverage on the rental car, you need an OPCF 27.
If you opt for year-round rental car coverage through an OPCF 27 endorsement on your own auto insurance, note that there is a dollar limit on this coverage, and the standard limit is $40,000 or $50,000. That would mean you’re fully covered for a vehicle of that value. If you tend to rent vehicles with a value over $50,000, or if you’re renting in the states in US dollars, be sure to ask your broker to increase this limit, to $75,000 or even $100,000. Not all insurance companies offer these higher limits, but if your insurer does, it shouldn’t make a huge difference in your premium.
If you accept the damage waiver from the rental company, the vehicle should be fully covered regardless of its value. If you have insurance through your credit card, coverage is usually limited to $65,000, or with a few cards, $85,000.
Make sure you’re covered
“Make sure that you have the right insurance before you decline the damage waiver,” says Logan. “You want to save those $20 a day, but a lot of credit cards look the same. Did you use right one when you booked the rental? If you have year-round coverage on your own insurance, you can rest easy.”
If you’re not sure whether or not your auto insurance includes physical damage coverage for a rental car, feel free to call the auto insurance brokers at Mitch.