Introduction
Rental car insurance is usually presented as an add-on when one rents a car. The intention of the insurance is to safeguard you against monetary loss should the rental vehicle be damaged or in an accident. As simple-sounding as this may be, the complexity of coverage and the types of policies can lead to confusion. It is essential that you know what every category of insurance does and how that might or might not overlap with insurance coverage you currently have.
Renting car insurance typically has four basic types of coverage. Collision damage waiver insures damage to the rental car itself. Liability coverage insures damage that you do to other cars or property. Personal accident insurance insures medical expenses for you and your passengers. Personal effects coverage insures contents of the rental car against theft or damage. All of these serve a different purpose, and whether you require them or not is based on your individual circumstances.
Why Rental Car Insurance Is Provided
Rental agencies provide insurance as a way to minimize their own risk and give their customers peace of mind. Most renters are unaware that they can be liable in an accident for both repairs and lost rental revenue during the time the car is being repaired. By paying for the insurance, the renters pass the risk on to the rental agency or their insurer.
In a few instances, the insurance is actually included in the rental agreement based on the country or region. In others, it is an add-on that is optional and usually costly. Customers often feel compelled to take this insurance without knowing whether they need it. Having a clear idea of what your own insurance does beforehand can enable you to make a decision quickly and with confidence.
How Personal Auto Insurance Applies to Rentals
If you have a car and hold a personal auto insurance policy, you might already have rental car coverage. The majority of comprehensive and collision policies cover rental cars for personal use in the country. This is to say that if you have an accident while driving a rental, your personal insurance will cover damages, just like it would if you were driving your car.
Yet this coverage is not always included free. If your policy does not have comprehensive or collision coverage, it will not insure a rental car against damage or theft. Your insurance will also only compensate up to policy limits. If this figure is not enough to pay for repairs or liability, you may still be liable for the excess. Always first consult your insurance agent before taking a car on rent in order to ensure the level of coverage.
Credit Card Rental Insurance Benefits
Most credit cards provide rental car insurance as a privilege, particularly higher-end cards. The coverage typically covers you if you rent the car using the card and turn down the rental agency’s collision damage waiver. Credit card insurance is either primary or secondary. Primary is when it covers you prior to your own auto insurance. Secondary is when it covers you only after your own insurance pays its share.
Credit card insurance generally covers collision damage but can omit liability protection. It can also exclude specific vehicle types such as trucks or luxury vehicles. It can also place limits on rental length or protection in certain countries. To keep from being surprised, contact your credit card company in advance and request a written explanation of the rental car insurance coverage.
The Place of Travel Insurance in Rental Protection
If you buy travel insurance on a trip, it could cover rental cars. International travelers will find this form of insurance particularly useful since their personal auto insurance and credit cards may not cover them outside the country. Policies that include rental protection typically offer coverage for collision, theft, and possibly personal accident and liability.
But not all travel insurance policies have rental car coverage automatically included. Some allow it to be added on, and some have varying amounts of coverage. Taking the time to read the policy description carefully and know what is covered and what is not covered is important before depending on travel insurance as your only protection while renting.
When Rental Car Insurance is Worth Purchasing
There are a number of situations in which buying rental car insurance is a good idea. For instance, if you do not possess an auto and do not have personal auto insurance, you do not already have protection. Under this scenario, you need rental insurance to keep from being held financially accountable in the event of damage, theft, or injuries.
Another example is when your own policy has a high deductible or only provides basic coverage. In the case of an accident, you may find yourself paying thousands out of pocket before your insurance even kicks in. Rental car insurance can give you immediate and lower-cost protection with no deductible.
If you are abroad in a place where the existing insurance does not cover, then renting protection or a travel insurance is the only way to be protected. Road conditions, the law of driving, and risks tend to be different outside the country, so you are especially at risk and should be covered.
Finally, if you wish to safeguard your own insurance record from claims that will drive up your premium, it may be worth paying for rental coverage even if you already have protection. This prevents claims from appearing on your record and gives you an added level of peace of mind.
When You Can Safely Decline Rental Insurance
There are also cases where you can reject rental insurance with assurance. If your own auto insurance policy provides full coverage, including collision and liability, and you are renting a typical car for personal use within your home country, there is usually no need to purchase additional insurance.
Likewise, if your credit card offers primary rental coverage and you are comfortable with its terms, you can refuse the collision damage waiver. Your credit card company will pay for any damages to the rental car in this situation, so you won’t have to use your personal insurance at all.
If your employer is leasing the vehicle for company travel and the company’s policy insures the rental, you also might not have to buy extra protection. Just be sure to check with your employer that the coverage is adequate and that you are included as an approved driver.
Some regular travelers opt to buy an annual car rental insurance policy from a third-party company. These policies are generally cheaper than rental agency daily coverage and offer good protection whenever they rent a vehicle. This is an option to consider if you travel frequently.
Common Mistakes to Avoid
Most renters mistakenly believe that they are covered by their personal insurance or credit card without realizing that their policies contain exclusions or limits. Not checking your coverage prior to renting can result in costly out-of-pocket expenses.
Another mistake is purchasing redundant coverage. For example, if both your personal insurance and credit card offer comprehensive protection, buying additional rental insurance may be unnecessary and costly. Educating yourself about what is included in your existing policies will help avoid wasteful spending.
Renters also tend to ignore exclusions in credit card or travel insurance policies. These can include exotic or luxury cars, some countries, or rentals over a certain number of days. Always read the fine print to make sure your intended rental is within the coverage range.
Finally, some tenants believe that rental insurance is all-inclusive. In fact, even the best plans will not cover items such as lost keys, towing, or tire and windshield damage. Being aware of the coverage limits will prepare you for what is and isn’t covered.
Steps to Take Before Renting a Car
Before you go to the rental desk, take a few moments to make sure you are completely aware and covered. Begin by calling your auto insurance company and inquiring if your policy covers rental vehicles. Find out what kinds of coverage are included and if there are any exclusions.
Then call your credit card company to verify whether rental insurance is offered and on what terms it is provided. Ask if it is primary or secondary coverage and what vehicle types and locations are covered.
If you do have travel insurance, see if it has rental protection and if it’s valid in the country where you’ll be renting. If not, you can add it or buy separate rental insurance from a third party.
Finally, check the rental firm’s insurance policies on the web prior to going. Know what’s covered with each type of policy and see how it compares with the coverage you already have. Preparing will allow you to avoid making rash decisions and making the correct choice on impulse.
Making a Smart Choice
Whether or not to purchase rental car insurance is up to your specific circumstances, current insurance policy, travel itinerary, and risk comfort level. Some individuals like the peace of mind that comes from having rental coverage even though it may be redundant over their current insurance. Others still have enough confidence to rely on personal or credit card coverage.
There is no one-size-fits-all answer. The key is to gather all necessary information ahead of time, weigh the potential risks and benefits, and choose the level of protection that matches your needs. Avoid making decisions at the counter without reviewing your current policies and understanding your responsibilities.
Final Thoughts
Rental car insurance can be a valuable safety net in certain circumstances, but it is not always necessary. By reviewing your personal automobile insurance, credit card policies, and travel insurance, you can make a well-informed decision that helps safeguard both your wallet and your peace of mind. Having information about when to take or skip rental car coverage is a matter of planning ahead, being familiar with what protection you already have, and researching the special features of your getaway. With proper planning, renting can be an easy decision to make without forking over any extra money.
