If you’ve rented a car, you’ve probably been warned by salespeople at the counter about the possible consequences of walking away without buying their company’s rental car insurance. Put on the spot, you might not feel confident about exactly what coverage you already have.
Don’t let them guilt you into buying insurance. That’s what rental companies are counting on, along with their commissions for selling you the coverage.
Each state has different car insurance and rental car insurance coverage. Having experienced the ugly side or car rental agencies and insurance coverage, it criticism to know the facts. It could save you lots of money out of your pocket.
Do you need insurance to rent a car?
You don’t need to have your own auto insurance policy to rent a car. However, rental agencies typically have minimal coverage on their vehicles, so if you get into an accident, you could be responsible for significant expenses. Buying additional insurance from the rental car company, using a credit card for coverage or getting a standalone policy through a third party is an option.
Can your own auto insurance cover it?
Determine if you already have coverage within your own auto insurance policy. You may have to call the company prior to your rental. Coverage from your own policy applies when you are using a rental car for personal, nonbusiness purposes. The rules may be different for business use of a rental car. Your employer may have coverage when using a rental car for business.
What about car crashes and car theft?
At the counter you can purchase a loss-damage waiver or LDW, also called a collision damage waiver or CDW, gets you off the hook for damage to the rental vehicle or theft of the car. It’s technically not insurance but rather a waiver that says the rental car company won’t come after you.
If you have collision and comprehensive coverage on your own policy, it generally will extend to a rental car as long as you’re renting within the U.S. or Canada. However, you will still be responsible for the deductible and additional charges while the vehicle is being repaired and filing a claim on your auto insurance policy could raise your premium.
If you don’t have comprehensive and collision on your regular policy, or you’re renting in a location where this coverage isn’t in effect, you should pay for the LDW damage coverage.
Damage you do to others
Supplemental liability protection will pay for damage you do to others’ vehicles or property. Typical limits range from $300,000 to $1 million. If you don't have your own auto insurance policy, or if you’re traveling in a country where your own policy doesn’t offer coverage, you should buy this. If you have minimal liability coverage on your auto policy, you could buy the supplemental protection to boost your coverage.
Injuries to you
Personal accident insurance covers medical costs for you and your passengers if you’re involved in an accident. This includes ambulance, medical care and death benefits. If you have personal injury protection or medical payments coverage through your auto policy, you likely won’t need personal accident insurance as long as you’re renting in the U.S. or Canada. Your own health insurance may cover you if you’re staying within the U.S. Overseas.
Personal items stolen are coverages by you insurance policy up to a set dollar amount. A homeowners or renters policy will generally cover your possessions if they are stolen, even when traveling out of the country. You’ll typically need to file a police report, and your deductible amount will apply.
Using your credit card for rental car coverage
Credit cards often provide coverage for rental cars, assuming you used the card to pay for the rental and the rental is in your name. You’ll automatically have this coverage if it’s included with your credit card, no need to call or sign forms. Usually this is secondary coverage, meaning your own auto insurance policy will pay out first. Call your credit card issuer to get the details.
Buying rental car insurance on your own
Some companies sell standalone policies for rental cars if you don’t want to buy insurance at the counter. Generally, you need to decline the rental company’s coverage to use these.
The bottom line:
You should be aware that rental car companies expect to earn a certain amount of income. If a vehicle doesn’t have “walk away” coverage. They will charge your credit card for lost revenue while the vehicle is being repaired.
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