Will your car insurance policy cover you in Hawaii or does it take a vacation too?

You’re packing your bags for a glorious Hawaiian vacation. Flip flops? Check. Sunscreen? Check. Car insurance policy? Probably not. In fact, most people don’t even think about whether their car insurance policy will cover them when driving in Hawaii until they’re standing at the rental car counter. So, does your car insurance policy cover you, or does it take its own vacation while you’re gone.

“I’M SURE WE’RE PROBABLY COVERED. RIGHT?”

That’s the assumption that most people make while at the rental car counter. The truth of the matter is that most people want to get on with their vacation, so they assume they’re covered and decide to just take the risk. However, before you take that risk, it’s important to know how your car insurance, homeowners’ insurance, rental car insurance and credit cards can work for you – and againstyou.

According to the United Services Automobile Association (USAA), here’s how these different types of insurance, as well as credit card protection, generally work in rental car scenarios:

• Your car insurance. Your regular auto insurance policy will generally transfer to a rental car and cover you if you cause an accident based on liability insurance, collision coverage and comprehensive coverage.

Liability insurance coverage would pay you up to your policy limits for the damages to other cars or property, collision coverage would pay for accident-related damages to the rental car you’re driving and comprehensive coverage would take care of damages to the rental vehicle not related to a traffic accident, such as theft or vandalism.

So, chances are that your car insurance policy does not take a vacation while you’re away. However, keep in mind that every situation is different, and sometimes even having full coverage on your vehicle at home may not provide you with enough protection in Hawaii based on your policy limits.

• Rental car insurance. Clearly, anyone without a car insurance policy needs to get rental car insurance. However, even those with insurance may want to consider getting extra coverage, again, in case your own policy doesn’t provide you with enough protection.

Another reason to get rental insurance has to do with “indirect damages.” According to the USAA, some insurance companies won’t protect you if you’re in an accident and your rental car company holds you responsible for “indirect damages” – which include a loss of profit to the company while the car is undergoing repairs and can’t be rented out, depreciation of the vehicle and certain administrative fees.

• Credit card protection. While many credit cards come with rental car insurance, the terms and conditions vary greatly based on what type of credit card you use to book and pay for the rental. Some offer primary coverage, which does not require you to make a claim on your regular auto policy. Other cards offer secondary coverage, in which case the coverage would only pay your deductible or other costs. Given the variables, it’s wise not to rely on credit card insurance protection unless you’re absolutely sure that you’re covered.
• Homeowners / renters insurance. While homeowners or renters insurance will generally do absolutely nothing if you’re in a rental car accident, it may pay to replace items that were stolen from your rental car. Something to consider when you’ve left your iPad on the back seat.

MAKING AN INFORMED DECISION ABOUT WHAT MAKES SENSE FOR YOU

Before you determine whether to purchase full rental car insurance or simply rely upon the insurance you have, the USAA recommends doing two things before you rent that car:

1. Call your personal auto insurance provider so you know what terms apply to a rental vehicle.
2. Call your credit card company to find out what coverage it will provide.

The bottom line is to make sure that you make an informed decision about your coverage so that you can enjoy your vacation and not worry about the consequences of an accident.

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