Rental Car 101

The decision to rent a vehicle was easy. Now you’re ready to sign the contract, pack up the car and head out on the ultimate road trip. But one nagging question remains:

“If I’m in an accident, am I covered by my insurance?”

When renting a vehicle, there are a number of options available to ensure you’re covered and will have the peace of mind needed to enjoy the trip ahead.


What am I covered for when renting a car?

If you have a personal auto policy for your own car, your liability coverage will extend from your personal policy to the rental car. This means if you hurt anyone or damage another person’s car or property, your car insurance will take care of it, but your premium will also be affected.

In order to be covered for physical damage, like if you damage your rental car, you need to add the SEF 27 (that’s an endorsement) to your personal auto policy. This covers you for legal liability for damage to cars you don’t own. Speak to your insurance advisor for all the details to ensure you are properly covered.


What about if I don’t have auto insurance?

If you don’t have your own auto policy for a personal car, things are a bit more complicated. If you book your rental car through AMA Travel or one of our car rental partners, we offer a Collision Damage Waiver policy that covers loss or damage to the rental vehicle. It transfers the responsibility for the cost of the damage from you to the Insurance Company. The approximate cost is $17 per day and covers the vehicle up to $60,000 with no deductible. This means when you book with us, you probably shouldn’t book a vehicle that would typically cost over $60,000 to replace, because it won’t be fully covered (sorry, no Aston Martin!). Keep in mind, AMA’s Collision Damage Waiver just covers collision damages, and not liability, you have to get that through the rental car company directly if you would like that coverage.

Most rental locations offer a similar plan of some sort, where you pay to transfer the responsibility for the cost of the damage from you to the rental company. Make sure you get all the details from the company you’re renting from and confirm both liability and damages are covered (ask if both damages and liability are included).


What is Liability?

Liability is the state of being liable, which means “obligated according to law.” Basically, being liable means being legally responsible for something.

Liability insurance pays for the damages or losses suffered by others for which the insured person is legally responsible. Say, for instance, if you are found legally responsible for damaging another driver’s car or for injuring someone in a crash, your liability coverage would provide coverage in the case that you were sued. You should carry at least a million dollars of coverage in case you cause serious injury or loss of life.


What does my credit card cover?

Your credit card may provide collision damage coverage on automobiles that you rent. However, there may be certain limitations or conditions (such as you have to pay for the rental with that credit card). You should check with your credit card provider to learn about any restrictions.

Often credit cards will not cover “down time.” Downtime is the time a rental car cannot be rented because it is being repaired. So, if you crash the rental car, you could be on the hook for paying the rental cost of that car for every day it’s in the shop. Often credit card coverage will not cover down time, so double check the restrictions.


Would my credit card or auto insurance cover things first?

This depends on the wording in the contract of both the insurance policy and the credit card policy. Usually the credit card company will have a clause claiming their coverage, which may be limited, is only used as excess insurance, meaning that they pay only what the insurance policy will not. This is common, but you’ll have to speak with your credit card provider to be certain.


Does the AMA CAA Rewards credit card offer rental coverage?

The new CAA Rewards MasterCard does not include car rental insurance.


What if I get the insurance from the rental company? How does that work with my regular auto insurance?

If you purchase the auto insurance from the rental company then they would respond to the accident, not your personal insurance. You’ll need to double check with the rental company about restrictions.


If I get in an accident in my personal car, and my car is being repaired, do I get to drive a rental car?

If you have the SEF 20 endorsement (also called Loss of Use) on your policy, you can get a rental car while your car is being repaired regardless of who was at-fault for the accident. If you do not have the SEF 20 but the accident was the other person’s fault, the other insurance company will pay for a rental for you. It’s usually best for you to have the SEF 20 on your policy, particularly if you don’t have access to a secondary vehicle.


Things to ask about your insurance when renting a car:

  • Am I covered for liability? Up to what amount? (Should be at least a million dollars of coverage)
  • Am I covered for collision damage? Is there a deductible I’d have to pay?
  • Is “down time” covered in the event of damage to the rental car?


Does AMA have any preferred rental companies?

We offer car rentals from almost any car rental company. We recommend the following Reward Partners: Alamo Rent-A-Car, Enterprise Rent-A-Car and National Car Rental.


If I book my rental car through AMA, is insurance coverage included?

No, insurance coverage is not automatically included with any of our recommended car rental partners.