Do you need to buy rental car insurance?

Maybe you have been in the same situation. Your flight just landed, you have picked up your luggage and now you are at the rental car counter. You are tired from the flight and already thinking about ordering room service at the hotel when you are asked, “Would you like insurance with your rental car?”

Truth be told, there is not a one-size-fits-all answer. However, you can likely make a decision you’re comfortable with by considering a few things.

What Rental Car Coverage You Might Already Have

First things first, start with your personal auto insurance. It is likely that your policy will provide the same level of coverage for your rental as it does for your own personal vehicle. This usually includes liability insurance and depending on the policy you purchased, may include collision, comprehensive and medical payments.

There are some exclusions, however, that it is important to be aware of. Some insurers won’t cover rentals in a foreign country or rentals that are being used for business. It is important to get in contact with your insurance agent to confirm your coverage.

Next, there is your credit card. Most cards will offer some degree of coverage, but it varies widely. Credit card coverage is usually secondary and designed to pick up where your auto insurance leaves off. It also tends to be mostly confined to collision, damage, and theft. For coverage to apply, most cards require that you decline the rental company’s collision damage waiver and pay for the car in full with the card that provides the protection. It is important to contact your card company to specify what exactly is covered.

Lastly, consider your health and life insurance. If you’re in an accident involving a rental car and you have these policies, you likely have coverage for your own costs. Additionally, with your homeowners insurance, you may have personal property coverage to help repair or replace valuable belongings that are lost, damaged or stolen while you’re in a rental. Your deductible and policy limits will apply.

What Types of Insurance the Rental Car Agency is Offering

Typically, a car rental agency will offer you four types of insurance to purchase:

• Collision damage waiver – The rental car company won’t charge you for a damaged or stolen vehicle when you buy this.
• Supplemental liability protection – This coverage will ensure you are covered for costs to others if you cause an accident in the rental car.
• Personal accident insurance – This coverage will pay for injuries of the driver or passengers of your rental car.
• Personal effects coverage – Reimburse you for stolen personal items while renting the car.

What Rental Car Coverage You Might Be Missing

If something were to happen to your rental car, you may be looking at loss of use and diminished value fees and your regular policy may not cover them.

• Loss of use is the income that the rental agency loses due to the vehicle being in the shop for repairs.
• Diminished value is the calculated reduction in a vehicle’s resale value as a result of an accident.

Credit cards sometimes cover these; however, they may require documentation that rental agencies can be reluctant to provide.

Before you make your next trip, give your insurance agent a call and check with your credit card company on what rental car insurance coverage you already have, so you’re ready to make an informed decision at the rental car counter.