Rental Cars, the Personal Auto Policy, & the Loss Damage Waiver

Summary: A rented car is covered as a non-owned vehicle under the Personal Auto Policy (PAP). The policy promises to cover damage to a non-owned car in the same way it covers an owned car—the insured pays his deductible and the policy then pays for the remaining damage. However, rental car companies offer an item called the loss damage waiver (formerly the collision damage waiver), that may confuse insureds when it comes to physical damage coverage for rented autos. This treatment is meant to clarify the coverage questions for the insured. It first examines the language of some rental companies’ contracts to see what and for how much a renter is responsible. It then looks at how the PAP might or might not cover such items, and makes some suggestions for agents when advising their clients about rental cars and insurance.

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