There’s great debate over the question of whether or not it’s necessary to purchase rental car insurance when renting a vehicle. The rental car agency might insist that you do, citing legal obligations, while friends or family might tell you it’s unnecessary or even a scam. With so many conflicting voices, it can be hard to make a confident decision. However, once you learn why you need insurance on a rental car, the different ways you can obtain insurance, and how insurance covers you, you’ll be ripe to make that educated decision all by yourself.
When renting a vehicle, be sure to always go over it thoroughly before taking possession of it and before turning it in. Take photos of the car at both times. There may be dings or dents already on it that you do not want to be held liable for. Damage could also happen to it before they inspect it after being turned in.
Yes! You Need Insurance.
Although you may already be covered.
If something happens with your rental car, you could end up paying infinitely more out of pocket than the small amount purchasing insurance might cost you. Here are some of the ways you could end up in hot water without purchasing insurance:
Damage to the rental car. Even if you’re the safest driver in the world, you could still get into an accident. Moreover, being a safe driver is not going to prevent door dings and major dents to your rental vehicle from others sharing the road with you and your rental car. If any damage occurs to the rental car while it’s in your possession, you are held liable for the repairs or a replacement. Depending on the type of vehicle that you rent, you could be forking over tens of thousands of dollars or more, and if you don’t have insurance on the car, you’ll have to pay all of that out of pocket.
If you have auto insurance in force, speak with your agent to see if your auto insurance policy will extend coverage to the rental. Generally, if you have a vehicle with full coverage, the rental car will be covered as well. Your collision deductible would apply if covered.
Loss of use. In addition to having to pay to fix or replace the vehicle itself, the rental car company will also charge you for loss of use for the entire length of time that they are unable to rent out the car. You have to continue to pay to rent the car until the vehicle is returned in perfect condition or until a brand new one takes its place. Your insurance company may pay for reasonable loss of use in addition to repairing the vehicle. You will want to speak with your agent or the carrier before renting a car to confirm this.
Liability obligation. The cost of the damage done to the rental car plus the loss of use (combined) pale in comparison to the potential damage from a liability claim. If you hit other vehicles or people while driving a rental car and you are at fault, you will be held responsible for their injuries and damages. Medical costs from a serious accident can run easily into the hundreds of thousands of dollars. Check with your agent on your liability coverages as well, you’ll want to make sure that will extend to your rental.
Ways to Insure a Rental Car
The best recourse to avoid facing any of these heartbreaking woes is to make sure you always have coverage on rental vehicles, and there are a few different ways to do that, using:
Your personal insurance policy. Depending on your insurance carrier, you may be able to cover your rental vehicle without having to make any changes to your policy. Most insurance companies will extend liability coverage from your personal policy to your rental car, and many will transfer physical damage coverage too, as long as you already have it on another vehicle on the policy. However, your personal insurance policy likely will not cover for loss of use. It is essential to check with your insurance company or agent to see the specifics of what your policy will cover regarding rental vehicles.
Insurance through your credit card. Some major credit cards will extend coverage to any vehicle rented using that card for no cost to you. Not every credit card company does this, though, and the limits of liability may be significantly lower than a standard insurance policy. Again, check with your card provider to find out the specific terms before making a decision.
Insurance through the rental car company. The most obvious way to make sure the rental vehicle is insured is to purchase it through the rental agency for an additional daily fee. The insurance provided by the rental company offers loss of use coverage and also may provide extra coverage for things a standard insurance policy would not. As a drawback, the insurance purchased through the rental car company requires you pay an additional fee, whereas you might not need to if you rely on your personal insurance policy or credit. Since the rental car insurance’s specifics can vary as well, ask the rental car company for details when considering this option.
Next Time you Rent
The costs associated with being in an accident with a rental vehicle can be astronomical. Luckily, now you know exactly what to say the next time the rental company asks if you want additional insurance. Your answer? If not a resounding “YES!”, at least you may not be so quick to decline the rental car company’s extra insurance.