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Rental Car Insurance: Money Wasted or Well-Spent?

Have you ever rented a car and felt awkward confusion when the representative asked you to accept or decline rental car insurance? Could you have made a big mistake if you’d declined? Would you have wasted money if you’d accepted? Understanding your regular insurance policies and what they cover when you’re behind the wheel of a rental car can help you make an educated choice next time you’re at the rental counter.

The minimum requirement

If you don’t have an auto insurance policy of any kind, it’s a good idea to purchase the rental company’s insurance. Rental liability coverage, which would protect you if you were to cause injury or property damage to others while driving, costs between $7 and $14 per day on average.

Anyone who does have an auto insurance policy has, at minimum, his or her state’s mandated liability insurance level. Therefore, you probably don’t need to sign up for more liability coverage unless you aren’t satisfied with the level of liability coverage you purchased in your personal auto insurance policy. In that case, it might be time to call your insurance agent and obtain more coverage. But there are many available layers of protection beyond liability coverage car renters should understand before checking “yes” or “no.”

Beyond liability insurance

If your auto insurance policy includes comprehensive and collision protection, that coverage should extend to you as a rental car driver. This means your comprehensive coverage would protect you if someone was to steal or vandalize your rental car, and your collision coverage would protect you if you were to damage the rental car in an accident.

In addition, if you plan to pay for your next rental car with a credit card, check with your credit card company to see if it offers any additional insurance. While the coverage credit card companies offer is typically secondary to primary auto insurance, it can provide significant protection. For example, some credit card companies will even reimburse you for your auto insurance deductible.

Car coverage considerations

Many people decline rental car insurance when certain they’re covered by their own auto insurance policies and their credit card companies. However, some scenarios may still make rental insurance worth considering.

  • Be sure to check if your primary auto insurance covers “loss of use” charges, which are fees rental companies may charge to make up for the rental income they lose during vehicle repairs. The “loss-damage waivers” rental companies offer cover both damage and loss of use and tend to cost $9 to $19 per day.
  • Are you driving the rental car for commercial or business use? If so, your personal auto insurance may not cover you.
  • Are you driving the rental car in a foreign country? If so, your personal auto insurance may not apply.
  • Do you have adequate health insurance that covers you in the event of an accident? If so, the rental company’s “personal accident insurance” is likely redundant but, if not, the $1 to $5 per day added to your rental agreement could be worth it.
  • Do you have a homeowners or renters insurance policy that covers personal belonging theft? This coverage may extend to any personal items you leave in the rental car, but your deductible would still apply if you were to file a theft claim. If your deductible is higher than the value of the high-ticket belongings you travel with or you don’t have a policy to protect your personal items, selecting a rental car company’s “personal effects coverage” could be wise. It often costs $1 to $4 per day.

The many available rental car insurance options can add up quickly. A $40-per-day rental car suddenly can cost double that for those who add on various insurance options. It is critical to review your auto, health, and homeowners or renters insurance policies before being put on the spot at the rental car counter. Doing so can help you ensure you have the protection you need without paying for redundant coverage. Your insurance agent can help you understand the fine print in your policies and decipher the scenarios in which you may want to consider added rental car coverage.