Renting a car is generally a straightforward process until it comes to the question of rental car insurance. Should you buy rental car insurance from the rental company? Are you protected by your credit card company? Or are you already covered by your own auto insurance?
Before renting a car for your next vacation, learn whether you should sign up for this additional coverage on the spot.
Rental Car Insurance Options
When you rent a car, you will be asked whether you want to buy rental car insurance.
You will be offered multiple coverage options, and they may duplicate what you already have through your current auto policy. The daily cost for coverage can be high, often exceeding the amount it costs to rent the vehicle itself.
Loss damage waiver: With this option, the rental company won’t charge you if the rental car is stolen or damaged.
Collision damage waiver: Similar to the loss damage waiver but limited to collisions, this type of coverage protects you in the event the rental car is damaged.
Liability coverage: This coverage meets state requirements for bodily injury and property damage liability.
Personal accident insurance: In the event there are injuries to you or your passengers while operating the rental car, this coverage will pay for the associated medical expenses. It also provides accidental death coverage.
Personal effects coverage: This covers any belongings in the rental car in the event they are stolen.
Is It Necessary to Buy Rental Car Insurance?
When you selected your current auto insurance policy, you probably spent a lot of time researching options and making sure your coverage meets your needs. State requirements such as no-fault insurance mandate the liability coverage that you hold, so you already have the amount of bodily injury and property damage coverage that meets minimum standards.
If your current policy has collision and comprehensive coverage you are also protected in these areas; however, if you did not choose these protections, it generally is worth the cost to purchase rental insurance since the unanticipated cost of replacing a rental vehicle can be devastating.
Most auto insurance policies cover you while you are operating a rental vehicle, but there are often gaps in that coverage such as diminution in value and/or loss of rental fees if and when a rental car is damaged. AAA’s insurance professionals advise consumers to purchase some if not all of the insurance coverage offered by the rental car agencies.
If you are unsure about whether to opt for some or all of the coverage options listed above from the rental agency, take the time to contact your insurance provider and review your policy prior to renting a car.
Credit Card Insurance Benefits
Check with your credit card companies to determine if they provide rental car insurance. You might be surprised to learn that you have this benefit, which is commonly included in cards that offer travel rewards programs. In order for it to take effect, you must reserve the car and pay for it using that specific credit card and decline the insurance offered by the rental company.
Once you confirm this benefit, there are other details about which to inquire. Find out whether your credit card company offers primary or secondary coverage. Primary coverage will take the place of your regular car insurance policy, while secondary will cover expenses not paid for by your main policy. Also ask for information about deductibles, since this is the amount you will be required to pay out-of-pocket if you make a claim.
Personal Usage Restrictions
When you rent a car for personal use, you are within the bounds of your auto insurance policy. However, if you plan to use a rental car for business reasons, you may not have the same protections. It is always advisable to contact your insurance provider ahead of time if you have questions about restrictions related to your coverage.
Protection for Personal Belongings
Particularly when drivers rent a car for vacation, they want to purchase personal effects coverage as electronics, jewelry and other expensive items may sit in an untended car for longer periods than usual. Remember that your homeowners’ or renter’s policy likely provides some protection when you are off-premises as well.
Uninsured Driver Considerations
All states with the exception of New Hampshire require auto insurance to purchase a car, so you most likely already have coverage. But vehicle insurance requirements vary broadly from state to state. Do you have enough insurance to cover you from a rental car accident? And are you protected from an uninsured or underinsured driver?
In states including Connecticut, Massachusetts and New York, all drivers must purchase uninsured/underinsured motorist coverage as part of their auto insurance policy to protect from at-fault drivers that carry little or no liability insurance coverage.
Believe it or not, according to the latest report from the Insurance Research Council, the rate of uninsured motorists ranges from 0-8% in New York and the surrounding area to up to 26% in states including Florida and California.
If you do not have car insurance, you should absolutely purchase insurance from the rental car company. You will need to meet minimum standards for liability, and you can rest assured that the rental insurance will cover you in the event of an accident. You can inquire about credit card benefits too, but make sure there that loopholes don’t leave you exposed to potential financial hardship.
Should You Get Rental Car Insurance?
To be sure you are fully protected, the answer is yes.
When deciding whether to purchase rental car insurance, you should take multiple factors into consideration, starting with the protection offered by your current auto insurance and credit cards, then decide how much rental car insurance you need to fill in the gaps.
Still have questions about insurance? Check out AAA.com/Insurance to see all the products AAA offers.