Do You Want Insurance with That?
Most travelers, upon hearing that question at the rental car counter, have the vague notion that they don't really need to buy rental car insurance—which is somehow covered already. But with just enough uncertainty, some purchase it just to be safe.
So, Do You Need Rental Car Insurance or Not?
Truth be told, there isn't a one-size-fits-all answer. However, you can likely reach a conclusion you're comfortable with by considering the following:
Know Your Personal Auto Policy
Because insurance policies vary, it's a good idea to call your agent before you rent a car to make sure you have the coverage you need. In many instances, your personal auto policy will provide coverage for a rental car—but that may be limited to the coverages you have on your own car, not adjusted for the rental. Of course, if you don't have a personal auto policy, you'll need to purchase coverage from the rental company!
And keep in mind that in the event of an accident, many rental companies will charge fees beyond repair costs. They may assess a loss-of-use fee for each day the car is unusable, as well as charge you because the value of the car has decreased. Not all insurance policies cover these fees. One potential benefit of rental car insurance—and most people are not aware of this—is that, in the off-chance there's a claim, it won't go against your policy (and potentially trigger a premium increase).
Check Your Credit Card Protection
Most credit cards will also provide some coverage, but payment is often limited to reimbursement of your personal auto policy deductible (after that policy pays for repairs). Generally, loss-of-use and other fees are not covered, but it's important to check with your credit card provider to determine their policies. And while some cards may offer additional protection for a fee, coverage is usually limited to damage to the car, not liability for any injuries to others. Remember, to receive any sort of benefit from your card, you must use that card to pay for your entire car rental.
Consider Any Unique Circumstances
Are you renting a car in a foreign country, or for more than a week? You'll definitely want to get confirmation of coverage from both your insurance carrier and credit card company because different rules might apply. Also, no matter where you are, vehicles such as trucks, RVs, or exotic sports cars aren't covered under standard agreements. And if you're using a car for business purposes, your personal coverage might not apply. Finally, if multiple people will be driving the car during your trip, make sure your coverages will apply to them.
Understanding Rental Car Coverage
Rental companies offer four main types of coverage:
A Loss Damage Waiver (LDW) relieves you of responsibility if your rental car is damaged or stolen. This may also provide coverage for loss of use.
Liability Protection provides protection from lawsuits if you are sued after an accident.
Personal Accident Insurance covers you and passengers for medical bills after an accident. You may not need this if you have adequate health and auto coverage.
Personal Effects Coverage protects you if items are stolen from your car. You're generally covered for this under your homeowners or renters policy—but keep in mind that the loss must exceed your deductible for you to receive payment. If you have a high deductible, it may make sense to purchase this coverage from the rental company.
Vacation is not the time to stress out about insurance. So before your next trip, be sure to verify coverage with your agent and credit card company. That way you'll be ready to make an informed decision when you get to the rental car counter.