Do I need to buy rental car insurance?
The trip you’ve been planning is finally here. After a long flight, you collect your luggage and head to the rental car counter. As you review the paperwork, the agent asks, “Do you want insurance on the car?”
You frantically try to remember if your auto insurance policy covers rental cars. And wasn’t there something about rental car coverage in that last email from your credit card company? It seems like you may not need it, but you really can’t remember the details. You end up buying the coverage just to be safe.
Did you waste your money? It depends: There really isn’t a one-size-fits-all answer when it comes to buying rental car insurance. However, there are a few things to consider that will help you determine if it’s right for you.
What does the rental car company offer?
Typically, car rental agencies offer four types of coverage:
1. Collision damage waiver means that the rental car company won’t charge you if the vehicle is damaged or stolen during your rental period.
2. Supplemental liability protection covers costs to others if you cause an accident in the rental.
3. Personal accident insurance will pay in the event of injury to or death of the rental car’s driver and/or passengers.
4. Personal effects coverage will reimburse you if personal items are stolen from the rental car.
What kind of coverage do I already have?
Your personal auto insurance policy will likely provide the same level of coverage for your rental as it does for your own car. This usually includes liability insurance; it can also include collision, comprehensive, and medical payments, depending on your policy. There are exceptions: Some insurers won’t cover rentals in a foreign country or rentals that are being used for business.
Your credit card may also offer some protection, but the degree of coverage can vary greatly. Coverage is usually secondary, designed to step in and pick up where your auto insurance leaves off. Most cards require that you decline the rental company’s collision damage waiver and use the card to pay for the car rental in full.
In addition, your health and life insurance policies may cover your medical costs if you are involved in an accident. If you have homeowners, renters, or condo insurance, you may also have personal property coverage to help repair or replace valuable belongings that are lost, damaged, or stolen from your rental car. Your deductible and policy limits will apply.
What am I missing?
Your regular policy may not cover loss of use and diminished value fees if something happens to the rental car. Loss of use is the income that the rental agency loses while the vehicle is being repaired. Diminished value is the calculated reduction in a vehicle’s resale value as the result of an accident. Your credit card may cover these fees, but be aware that they may require documentation that rental agencies can be reluctant to provide.
Before you take your next trip, call your independent insurance agent and verify the coverage available for your destination. Contact your credit card company to find out exactly what is covered when you use your card. Being prepared will help you make an informed decision about buying rental car insurance.