Do I Need Rental Auto Insurance

The decision of whether or not to purchase rental car insurance can be quite confusing to a consumer. You need to make sure that you are covered in the event that you find yourself in a car accident while driving your rental car, but you also do not want to be paying for coverage that is already provided by your insurance carrier or other sources. Instead of waiting until you are on your next business trip or vacation, plan ahead and know what coverage you already have.

First of all, call your insurance agent and find out exactly what your car insurance policy covers in the case of a rental vehicle. Confirm with your agent that your existing policy includes liability, comprehensive and collision coverage for rental vehicles. The comprehensive and collision insurance covers any damage you do to the rental car, while the liability insurance covers you if you injure someone else in an accident.

One place many people do not check for insurance coverage is with their credit card company. Many credit card providers will offer collision and theft insurance when you pay for your rental vehicle through their credit card. This coverage is normally secondary to your auto insurance policy and may have some restrictions. This coverage also only covers damage to the car, not liability claims that may come your way. Sometimes the credit card company will also exclude business use or put time and geographical limits on the coverage. Be sure to discuss all these limitations in detail until you understand them.

If you find that your are missing adequate coverage through your auto insurance policy and the coverage offered by your credit card carrier is not enough, then you should purchase coverage through the rental agency.

The rental company is going to ask you to sign a collision damage waiver. This waiver is not really insurance. It is instead a guarantee from the rental company that they will pay for certain damages. The damage waiver is typically going to cost you somewhere between $12 and $25 per day. If you decline this waiver, you are accepting full responsibility for any damages to the car.

The waiver also will cover any “loss of use” damages. This is money the rental car company would lose if the vehicle cannot be rented due to damages. Most car insurance policies do not cover this type of loss.

While car rental insurance can be confusing, it is best to make sure you fully understand what coverage you need and what coverage you already have.