Should You Buy Rental Car Insurance?

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Before you spend your money on rental car insurance, you'll want to see whether you're already covered by your own personal insurance policy and credit card provider.

Is it necessary to buy rental car insurance? Before you spend your money on rental car insurance, you'll want to see whether you're already covered by your own personal insurance policy and credit card provider. 

The subject of rental car insurance is a source of confusion for many. It is commonly believed that your personal car insurance policy automatically extends coverage to any car you rent. But is this true?

Your personal auto policy may extend coverage to rentals – or it may not. That’s why you need to do your homework before renting to find out.

When it comes to insurance, you really don’t want to take any chances, especially if you could end up on the hook for $30k worth of car (or more) in the unfortunate event of an accident.

Do you really want to take that big of a gamble just to save a few bucks? Are you feeling lucky?

Before you decline rental car insurance when you rent that spiffy red sports car, it’s a good idea to take the time to find out exactly what your personal auto policy does and does not cover. Yes, many personal auto policies do extend coverage to rentals, but not all do. And for the ones that do, there may be some limitations.

Are You Already Covered?

Your personal auto policy should state in plain language whether it covers rentals and how much coverage is provided.

Step 1: Check Your Regular Car Insurance Policy

Take the time to review your policy before renting so you will know for sure if you are covered. If there is anything in the policy that you don’t understand, contact a company representative to get a clear answer.

It’s important to keep in mind that even if your personal auto insurance policy does extend to rentals, it may not cover a vehicle that is more valuable than the vehicle on your policy. Usually, a rental must be close in value to the car on your policy to be covered. This could leave you with insufficient coverage if you decide to rent a Corvette while on vacation in Tahiti when your auto policy is for a Honda Civic. See the problem?

Some rental car companies also charge fees for various things when accidents occur. It isn’t just the cost of the vehicle you may be on the hook for if you are not sufficiently covered. They may also charge “administrative fees” after an accident or bill you for the repaired vehicle’s decrease in value. While your auto policy may cover the cost of replacing or repairing a wrecked rental, it may not cover the extra fees rental companies charge.

Step 2: Check Your Health Insurance Policy

If you have health insurance through your employer or have a self-employed health insurance plan, then the rental company's personal accident insurance is not suggested. The coverage you have from your health insurance should be enough to cover any medical bills and protect you if anything were to occur.

Step 3: Check Your Credit Card Benefits

Many are unaware that their credit cards may provide additional rental car coverage. The key terms here are “additional” and “may.” Not all credit cards offer this benefit.

The coverage credit cards provide is usually secondary to another policy. In other words, the coverage provided by your credit card may take care of some expenses not covered by your primary policy.

In order to qualify for any coverage from a particular credit card, you have to pay for a rental car with that card. You aren’t automatically covered just because you happen to have the card in your wallet.

To find out if your credit card(s) offer rental car coverage, read the fine print. Check the specific policies of your credit cards to see what they do or do not cover. And if you are ever in doubt or if something is unclear in the policy, contact the company for an answer.

A Collision Damage Waiver Can Offer Additional Protection

I’ve already mentioned how rental car companies may charge you fees in the event of an accident. It’s important to point out that they may also charge you for lost revenue while the car is being repaired. This could end up being a pretty big chunk of change – and it’s money that your personal auto policy may not cover.

You may be able to protect yourself from these fees and liabilities by purchasing a Collision Damage Waiver (CDW). A CDW is not an insurance policy. Instead, it’s a waiver you can purchase from a rental car company that releases you from certain liabilities.

Not all CDWs are the same. Just as you should take the time to review and understand the content of your personal auto policy to know if it extends coverage to rentals, you should also read the fine print on any CDW you are considering buying to know for sure what liabilities it releases you from and if it still leaves you on the hook for anything.

When Should You Get Rental Car Insurance?

Knowledge is power when it comes to rental car insurance. You can definitely save some money by finding out if your personal auto policy automatically extends coverage to rentals of comparable value. And you may also be able to further reduce your liability if something happens by purchasing a CDW.

Before renting, take the time to find out what your auto policy does and does not cover. Do your homework. If there is any doubt, purchase rental car insurance.

It’s always best to have more coverage than you need than to not have coverage when you need it.

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About the author'
Cyrus Vanover
Cyrus Vanover is a freelance business writer who helps marketing managers position their companies for success. Based in Virginia, he enjoys hiking the local trails, exploring new restaurants, and live theater when not writing.