Some car rental rates are surprisingly cheap. This is especially true now that car rental companies are competing with carpooling. When you reserve a car online, you may see rates of $10 per day or less. However, when you arrive at the rental counter, you will need to read and sign a lengthy contract, as well as make quick decisions about a number of extras, the most expensive of which is insurance which can cost you $20 to $50 from more per day.
It’s the rental car salesman’s job to convince you that this auto insurance is absolutely necessary. Let’s face it, it would definitely ruin your vacation and your financial situation if something happened and you didn’t have the proper coverage. However, wouldn’t it be nice to keep the extra money in your pocket, especially if your personal car insurance already covers you? There’s no point in doubling up on car insurance, is there?
Surely these are questions you should address in advance. There’s no fun standing in front of a rental car counter poring over these details. Unfortunately, there is no definitive answer that applies to every person or situation. It really depends. It depends on your insurance company, what your policy says, the types of coverage and limits you have, the nature of the incident, and a myriad of other factors.
In most cases, your personal auto insurance should cover youbut let’s take a closer look.
For your primary auto insurance to cover your rental car, you will need three types of coverage: civil liability, collision and all risks.
Liability insurance will cover damage to other vehicles and property, as well as injury to other people, up to the limits of your personal policy. Collision insurance will pay for damage to the rental car that occurs in the accident. All-risk insurance covers other damage to the vehicle that does not result from an accident, such as vandalism or theft.
Most US states have mandatory minimum liability insurance requirements that cover at least property damage and bodily injury. Comprehensive coverage and collision coverage are not always required. It’s your job to make sure you have enough insurance coverage and know your policy limits.
Keep in mind that if you have home or renter’s insurance, your belongings may be covered if they are stolen from a rental car.
In addition to the limits determined by your primary policy, there are other considerations. For example, if you drive a Nissan Versa and you rent and destroy a Chevrolet Corvetteyour auto insurance company may not be willing to pay the full bill.
Also, if the damage to the rental vehicle is considered negligence, you may be out of luck. If you leave the car unlocked and someone steals it, it will likely be considered your fault and not covered. Likewise, if you drive recklessly and cause an accident, the same could be true.
As an added benefit, many credit card Companies offer rental car insurance as long as you book and pay for the car with the credit card. Some companies offer at least a basic amount of secondary coverage for free, while others assess a small fee for more extensive insurance coverage or full liability.
Another option is to obtain coverage through a third party. If you use one of the major travel websites to book your rental car, there is usually an option to add collision coverage for around $10 per day. You can also purchase third-party car insurance online separately from various companies.
Purchasing Collision Damage Waiver (CDW) coverage from a rental car company is the most comprehensive and convenient way to ensure that you won’t be held financially responsible. It is not really an insurance by definition, but rather a disclaimer. When you buy it, the rental company waives its right to charge you for damage to the car, except in extreme circumstances.
If you don’t buy the CDW, the company might go to great lengths to make sure you pay for even the smallest bumps or scratches. Repairing a simple scratch could incur additional costs for the revenue the rental company loses during the repair and the administrative costs of filing the claim. Larger repairs could leave you liable for towing costs, as well as costs associated with the reduced resale value of the vehicle.
If you rely on your personal insurance policy, a credit card or a third party for coverage, you will generally be liable for all damages up front. Then it’s up to you to file a claim and attempt to be reimbursed later.
Be proactive. Talk to your auto insurance agent ahead of time. Ask if your personal policy coverage will cover the vehicle you plan to rent. If coverage isn’t enough, find out what changes you can make to your policy to make sure you’re covered. If you have home or tenant insurance, check to see if your belongings will be covered.
Make sure you have your car insurance policy documents with you when you arrive at the rental counter. That way, if there are any questions you can’t answer, you can refer to your insurance policy. Also, have your car insurance agent’s phone number with you in case you need to call for clarification.
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