When Should You Purchase Rental Car Insurance

So you’ve arrived at your destination, scooped your luggage at baggage claim, and finally made your way to the car rental counter to pick up your rental car. We’ve all been there. You have to make a snap decision whether or not to buy the supplemental car insurance – which could cost anywhere up to $45 a day.

This can be a tricky decision, given the fact that you may already be covered through your existing car insurance or one of your credit cards. It’s certainly tempting as you’ll be driving an unfamiliar vehicle, perhaps in an unfamiliar city, and the rental agent often strongly urges you to buy the coverage, implying that you won’t be covered otherwise.

Chances are you are covered, well at least partially. Though car rental companies are counting on your lack of knowledge of what your coverage includes, so they’ll try to parlay your uncertainty into add-ons that can more than double the cost of your rental. YIKES!

 

Here’s a few coverages they may throw your way:

• Loss/collision damage waiver: Also known as LDW or CDW. This covers you for costs if your rental car is damaged in a crash, stolen, or vandalized. This may or may not include “Loss-of-use” charges, which rental car companies charge for lost profits while the vehicle is being repaired.
• Liability: Often called supplemental liability insurance or SLI. This covers you if you damage other vehicles or property while you’re driving. It can also pay medical expenses for others who are hurt in a crash if you are at fault.
• Personal effects coverage: (PEC), protects your personal items if they are stolen from or damaged in your car.
• Personal accident insurance: (PAI), covers medical costs for you and your passengers if you’re hurt in a crash.

 

Am I Already Covered?

 

Your regular auto insurance policy likely already covers you if you are renting a car. If you live in a state that requires liability insurance and you cause an accident while driving your rental car, liability insurance would cover the costs of damages to the other car and injuries to the other car’s driver and passengers.*

 

PLEASE NOTE – your regular insurance policy may not be valid if you are renting a car for business use.

 

Does My Credit Card Cover Me?

 

Many credit cards offer some coverage for rental cars. Please be sure to check the fine print as the card may only offer collision coverage, which covers property damage but not costs associated with injuries.

In many cases, the credit card company may offer additional rental car insurance for a fee. The rates may be reasonable, but be sure that you do not pay extra for coverage that you already have from another source.

If your health insurance, for example, covers any injuries that you sustain in an auto accident, you would not need to purchase personal accident insurance for your rental from your credit card company. You may, however, need to purchase supplemental liability insurance to cover damages to another driver if you cause the accident (if your existing liability coverage doesn’t include rental cars).

Before you rent a car, call your credit card company to find out exactly what is covered.

Be sure to call each time you are about to rent a car to make sure that your coverage has not changed, since credit card auto insurance policies tend to change frequently. Also, verify that the coverage limit is high enough to adequately protect you.

Make sure you fully understand your coverage, so that you are not coerced into buying insurance you don’t need at the rental car office.

 

How You’re Most Likely Already Covered with Auto Insurance

 

Accidents & Car Theft

If your personal car insurance policy includes collision (which covers repairs to your car after an accident) and comprehensive (which covers loss or damage not due to an accident, such as fire, car theft, vandalism or hitting an animal), that coverage will extend to a rental car as long as you are using the rental car for personal, non-business purposes. You will, however, have to pay any deductible, and the claim could affect your insurance rates.

Most major credit cards provide some form of coverage, but only if you use that card to reserve and pay for the car rental and decline all extra coverage offered by the car rental company. Every card issuer has a different policy and different exclusions (typically for duration of rental, driving conditions, type of vehicle or country of rental), so be sure to check the coverage offered by each of your credit cards before you reserve a car. In addition, most credit card car rental policies only go into effect after you have already exhausted the coverage offered by your own personal car insurance policy.

 

Damage You Cause

If you have a car insurance policy in Connecticut, you are legally required to have $20,000 per person/$40,000 per accident in bodily injury liability (which covers the medical expenses of people involved in an accident that is your fault) and $10,000 in property damage liability (which covers damage to the other car involved in an accident that is your fault).

Your own liability coverage extends to a rental car, but liability costs can add up fast. Talk to your agent or check your car insurance policy (and your umbrella policy, if you have one) to see how much liability coverage you have.

 

Injury to Yourself

Any injuries you sustain should already be covered by your health insurance policy and/or your car insurance policy’s MedPay provision, and death benefits by your life insurance policy. Your usual deductible will apply.

 

Theft of Personal Articles

Your car insurance policy covers theft of your car itself, but not its contents. Loss due to theft should be covered by your homeowner or renter’s insurance policy, even if you are away from home at the time. Your deductible will apply, however, so if the cost of the stolen items is less than your deductible, you won’t be reimbursed. Any claim you make could also affect your future insurance premiums.

 

What Should I Do Before Renting a Car?

 

Step 1: Contact your car insurance company or local agent to make sure you understand your policy and what is covered when you rent a car.

Step 2: Contact your credit card company to find out what coverage it provides.

Step 3: Finally, bring your car insurance declaration page so you can present it to the rental company if any questions come up when you pick up your car.