If you’re traveling, you may end up renting a car for a number of reasons. In most cases outside of somewhere like New York City, it’s cheaper and easier to rent a car than to rely on taxis or rideshare services. You also have more control over the logistics of your trip.
Every time you rent a car, you’re offered insurance by the rental car company, and you may not take it, but is that the right decision?
We don’t really think about what might happen if we were to get into a car accident while traveling, but it does happen. Every state has its own car accident statute of limitations, so depending on the nature of an accident that occurs while you’re traveling and if you hurt another person, you could have to deal with legal issues.
The following are things to know as far as whether or not you should spring for the insurance the rental car company offers you.
Policies and Coverage
When you rent a car there are usually four types of coverage you may be offered including:
- Loss-damage waiver or collision damage waiver: If you’re in an accident in a rental car or the car is stolen you are going to usually be responsible for the financial loss, whatever that may be. With this type of coverage, you are waived of the responsibility. If you rent a car in the U.S. and you opt for this, there’s usually not a deductible. If you’re in another country, there is probably going to be a deductible which can be several thousand dollars.
- Liability or supplemental liability insurance: This coverage is protection from lawsuits that could come about because of something that happens during your rental period.
- Personal accident insurance: if you or your passengers were to have any medical expenses because of an accident that happened while you were renting a car, this would offer coverage.
- Personal effects coverage: This is usually an inexpensive add-on that covers belongings that may be stolen or damaged that you have in your rental car.
Do You Need the Insurance?
Buying rental car insurance with the company or at the counter can lead to spending $40 or more per day in addition to the cost of renting the car itself.
Most people are already covered, so in the majority of situations, rental car insurance isn’t needed.
You may have coverage from a variety of sources.
First, check with your own car insurance. If you own a car and you’re insured, you may have collision protection that would be on par with what the rental car company has available.
Most of these policies extend to rental cars, but if you’re unsure, check with your insurance carrier just in case.
However, if you have an older car, you may not have collision coverage.
It’s also possible a car rental company might charge you for their loss of revenue while the car is being repaired. To cover this, your policy would need loss of use coverage. If you don’t have this, you might think about getting collision coverage from the car rental company.
Liability insurance is different, and it’s required of drivers in the majority of states, but you may need to ensure you have enough coverage.
If you have travel insurance, check that policy and see what it stipulates as far as car rentals.
Your Credit Card May Provide Coverage
In addition to your car insurance, if you have any credit cards, there’s a high likelihood they offer rental car insurance, but you do need to pay for the car with that card.
Call your credit card issuer if you aren’t sure if you have coverage or you want to know more about the fine print. It’s important to get in touch before you rent the car.
Car insurance offered through credit cards is usually considered secondary, meaning it covers expenses and your deductible that goes beyond what your primary insurance company pays.
Certain exclusions are common with credit card coverage however, including luxury vehicles.
One of the major things to know as far as when to get rental car insurance and when it makes sense is that you should opt-in if you don’t have your car insurance policy. If you’re renting a car abroad, it may also make sense.
Before you make the decision, make sure you’re fully covered by your own insurance and/or your credit cards.