Holiday Travel – Do I Need Rental Car Insurance?

Tuesday, November 26, 2013

With Thanksgiving rapidly approaching the official start of the Holiday Season is upon us. As Holiday travel starts to heat up, many travelers find themselves considering the following question at the rental car counter:

Do I need to buy rental car insurance?

Many consumers have two things to consider before buying the offered coverage at the rental car counter:

  • Does your current auto insurance policy cover rental vehicles?
  • Does your credit card offer coverage for a rental car?

If your current policy covers rental cars, then the coverage offered from the rental car company is just an additional expense, and you won’t need the coverage.  But you will definitely need to check with your insurance agent or your insurer to make certain that your policy does in fact cover rental vehicles. Make certain that you have collision coverage when you rent a car, as this covers damages to your vehicle from accidents involving other cars or objects.

If your credit card does cover your rental car, often it provides coverage for  theft or damage expenses that are not covered by other insurance or reimbursement. In essence, the credit card acts as a secondary insurer, and it still makes sense to have additional coverage for collision.

Rental car insurance costs can run from  $9 to $40 a day, depending on what plan you select. The collision damage waiver, (or loss damage waiver) shifts liability for collision damage from the person renting the car to the car rental company. Liability insurance can provide protection for up to $1 million, and costs between $7 to $14 a day. If you are using your personal auto policy, it should already include liability insurance. For an additional $1 to $5 a day, personal accident insurance covers medical and ambulance bills for the driver and passengers in the event of an accident.

The coverage offered from car rental companies usually provide minimum liability coverage.  However, in the event of a major accident, that’s not going to offer very much protection.

Also consider, if you are in an accident in a rental car, you not only pay your deductible to fix the rental car but, you also pay the daily rental rate while the vehicle is being repaired. And it will be counted on your insurance which could result in increased premiums

In reality, what most rental car companies are offering you is not  “insurance”  in the traditional sense. Since rental  car companies are not licensed insurance agents in every state, what they offer is a protection package. In cases of clear negligence, like leaving the keys in the ignition, and the car unlocked, there can be questions to the real degree of coverage that the car rental company is offering.

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As you can see, making sure that you have adequate protection when you rent a car can be very confusing – the most important thing is to check your coverage with your agent or your insurer, to make sure you understand exactly what sort of coverage you have available for rental vehicles. If you need to get coverage at the rental desk, make certain that you understand exactly what degree of protection the coverage provides. Also, check with your credit card company to see what additional protection they can provide if you pay your rental fees with  their card.

Have a safe and happy Thanksgiving Day!
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