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Insuring vacation rentals – cars, motorhomes and boats

June 19, 2014 – by Melissa Schall, Wisconsin Medical Society Insurance & Financial Services

As you plan your itinerary and pack your bags, don’t overlook the importance of purchasing insurance when renting an automobile, motorhome or boat. Gaps in your insurance coverage can ruin a vacation.

Most personal insurance policies provide some coverage when renting an automobile, motorhome or boat, but it’s best to talk with your insurance agent about the specific coverages or limitations in your policy before leaving home. For example, most auto policies extend coverage only if you are renting in the United States, its territories and possessions, or in Canada. It is important to be aware that many policies do not provide coverage worldwide.

Even if you are staying within your policy’s territory, consider purchasing the rental company’s collision damage waiver (CDW)/loss damage waiver (LDW). Personal auto policies generally provide some coverage for rented vehicles, but without a CDW/LDW there can be gaps in coverage or no coverage at all in certain situations.

If you do not carry physical damage coverage on any of your personally insured vehicles, it is recommended that you purchase CDW/LDW from the rental company because there is no coverage to carry over to the rented vehicle.

If you are involved in an accident with a rented automobile, you may be responsible for the rental company’s loss of rental income from the damaged automobile. There also may be a tangible loss of value after the vehicle is retired and sold, and you could be charged for the diminution of value of the automobile.

In addition, the rental contract may hold you liable for various administrative or loss-related expenses such as towing, storage, appraisal or claims adjustment that result from an accident. These additional expenses are typically not covered by a personal auto policy.

When renting a motorhome, your personal auto policy may afford limited coverage. Most personal auto policies extend liability and medical payments to a rented motorhome, however, physical damage coverage typically is not provided by a personal auto policy. Purchase of the CDW/LDW from the rental company is recommended.

Your homeowner’s policy may provide some coverage when renting a boat or other type of watercraft, however, there are limitations due to the wide variety of rental watercraft available. If you have a personal watercraft policy, it may extend some coverage to a rented watercraft, but it’s best to check with your agent before renting any type of watercraft.

To learn more about personal automobile or homeowner’s insurance coverage, e-mail insurance@wismed.org or call 866.442.3810.

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