IS RENTAL CAR INSURANCE NECESSARY?

LEARN WHETHER YOU SHOULD SIGN UP FOR THIS ADDITIONAL COVERAGE

By Vanessa Young

Most drivers consult with friends and family when it’s time to select a car insurance policy. During the process, they often receive conflicting information about everything from coverage requirements to the impact of an accident on their premium. As you shop around for the best policy, ask yourself these questions about auto insurance to ease the confusion.

RENTAL CAR INSURANCE OPTIONS

When you rent a car, you’ll be asked whether you want to purchase insurance.

There are multiple types you’ll 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’re operating a rental vehicle, but this isn’t necessarily the case. If you’re 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 may be 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

You might be surprised to learn that you have this benefit. 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 to ask about. 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’ll be required to pay out-of-pocket if you make a claim.

PERSONAL USAGE RESTRICTIONS

When you rent a car for personal use, you’re 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’s 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 don’t have car insurance currently, you should consider purchasing insurance from the rental car company. You’ll 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’re currently uninsured, you must opt for rental coverage to meet minimum requirements.