Renting a car is a straightforward process until it comes to the question of rental car insurance. Before you rent your next car, 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 purchase insurance.
There are multiple types you will be offered, and they may duplicate coverage you already have through your current auto insurance. 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.
Current auto insurance protection
Most auto insurance policies cover you while you are operating a rental vehicle, but this is not necessarily the case. If you are unsure, take the time to contact your insurance provider prior to renting a car. This is the first step in deciding whether to opt for any of the coverages listed above.
The next step is to reassess your current coverage. 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 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 protected in these areas as well. 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.
Rental car company fees
Even if your current car insurance has you covered, there are still fees you may incur if an accident takes place or the rental car is damaged or stolen. Unless you purchase rental car insurance, you may be responsible for administrative fees and other charges assessed by the rental car company.
Credit card rental car insurance benefits
Check with your credit card companies to determine if you they provide rental car insurance. You might be surprised to learn that you have this benefit. While it commonly is included in cards that offer travel rewards programs, other credit cards provide offer it as well. In order for it to take effect, you generally must reserve the car and pay for it using that specific credit card. You then must 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 are tempted to purchase personal effects coverage. Electronics, jewelry, and other expensive items may sit in an untended car for longer periods than usual. Before signing up, remember that your homeowners’ or renter’s policy likely provides protection when you are off-premises.
Uninsured driver considerations
If you do not have car insurance currently, you should consider purchasing 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. Inquire about credit card benefits as well, but make sure there that loopholes don’t leave you exposed to potential financial hardship.
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. If you currently are uninsured, you must opt for rental coverage to meet minimum requirements.
Still have questions about insurance? Check out AAA.com/Insurance to see all the products AAA offers.