Should you buy insurance from a rental car company?
If you're renting a car, think about what you need before you purchase supplemental insurance or a damage waiver.
Posted June 16, 2008, at 12 a.m.
Whether you're on a trip and need transportation in a different city or your car is in the shop and you need a set of wheels to get to work and back, chances are you'll need to rent a car. That's the easy part. But, if you're like many of us, it becomes more difficult when you're faced with the decision of whether to purchase the additional insurance or damage waiver often offered by the rental car company.
To help you decide whether you should opt for the insurance offered by rental car companies, consider the following.
Do You Already Have Auto Insurance?
Generally, your personal auto insurance should extend to a rental car. A rental car most likely would be covered by Collision coverage or Liability coverage, depending on the state in which your policy is issued, because you're temporarily driving it and you don't own it. Basically, your policy will treat a rental like your primary vehicle while you're in possession of it.
If you're looking for more coverage, you may want to consider purchasing the additional insurance offered by a rental car company.
Do keep in mind that you may not be able to rent a car at all if you don't have auto insurance, as several major car rental companies may require you to have it.
Rental Coverage on Your Policy Does Not Cover Damage to or Caused by Rental Cars
If you have Rental Reimbursement coverage on your policy, you can only use it to rent a car if your personal vehicle on your policy is in the shop because of an accident. Rental coverage does not cover damage to a rental or damage caused while you're driving a rental.
What Does Additional Coverage Actually Cover?
Make sure you know what's covered if you purchase additional coverage from a rental company. Common coverages offered by rental car companies include a damage waiver, supplemental liability, personal effects coverage and personal accident insurance. In general, each provides different types of protection, as noted below. Please note that these descriptions are for informational purposes only, and coverages may vary between rental car companies.
- Damage Waiver – If your rental car is damaged or stolen, this coverage will apply. However, you may not be able to use it for accidents caused by speeding, driving on unpaved roads or driving while intoxicated. If you already have Comprehensive and Collision coverage, this coverage may duplicate coverage you already have on your own personal auto policy.
- Supplemental Liability – Provides additional liability protection, generally up to $1 million, if someone makes a claim against you while you're driving a rental car. For instance, Supplemental Liability would apply if you're at fault for an accident and the other party files a claim against you for injuries and vehicle damage that exceed your regular policy limits. Supplemental Liability coverage may also provide Uninsured and Underinsured Motorist coverage, depending on the company selling it. If you already have adequate liability coverage on your car and an umbrella policy if you own your home/auto, you may want to forego this coverage.
- Personal Effects Coverage (PEC) – Protects items and property you own if they're damaged. If you have homeowners or renters insurance, you may already have coverage, though a deductible may apply.
- Personal Accident Insurance (PAI) – Covers your injuries while you're driving a rental. If you already have health insurance or adequate medical coverage under your auto policy, this coverage may be unnecessary.
With both PEC and PAI coverage, only you and your passengers are covered — if you're at fault for an accident, PEC and PAI would not apply to any damages or injuries caused to other parties.
Cost of Additional Insurance
If you choose to purchase the damage waiver, personal accident and effects coverage, or supplemental liability protection, you could pay twice as much for your rental. Often, these types of coverage can cost up to $25 or more each, in addition to the base price of your rental.
Are You Covered Elsewhere?
Sometimes, credit cards offer protection for rental cars. If you're using a credit card to rent a vehicle, check with your credit card company to see if and what type of coverage is offered. It may be a built-in perk of your card, in which case you may not need to pay extra for the same type of coverage offered by the rental car company.
Remember: Be sure to ask questions and verify what's covered before you purchase additional insurance from your rental car company. Only you can decide what's best for your financial situation and peace of mind.
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