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Rental Car Insurance: To Buy or Not to Buy

Jul 31, 2013

Most auto rental companies will sell you insurance coverage on the car you hire. But deciding whether or not you need it, let alone the type and quantity of coverage you should purchase, can be puzzling.
Tips to help you choose
Chances are you use a credit card when you rent a car, and most major credit card companies offer free car rental insurance when you use their card to pay for your rental. But you may wonder whether or not the free insurance provides adequate protection.
It seems like a no-brainer to let your credit card cover your car rental. But before you turn down the rental car company’s offer, make sure you know what you’re getting. Find out exactly what protection your credit card company’s insurance offers you. You can then compare it to what the rental car company insurance covers.
Cover all your bases
Credit cards offer only one type of coverage: a loss and damage waiver, also called a collision damage waiver. This waiver covers the cost to repair a damaged car or the replacement of a totaled or stolen car. It does not cover anything else. This is not liability insurance and doesn’t cover you for damage, injury or death that you cause.
Some credit cards may offer supplemental protection for a fee. If your card doesn’t offer a supplemental plan, check your personal auto policy to see if liability protection is included for car rentals. Otherwise, you might consider the coverage offered by the car rental agency for liability because your credit card won’t provide it.
Know your coverage

Just because your credit card offers loss and damage coverage doesn’t mean that it’s the best option for you. Some cards offer better protection than others. It pays to call your credit card issuer beforehand and find out how much the protection covers, if towing or out-of-use fees are included, and what restrictions may apply.
Consult your personal auto insurance carrier
Many personal auto policies also cover your rental car. Depending on which state you reside in, the carrier that you are insured by and the strength of your personal auto policy’s coverage, you may already be fully covered. Keep in mind that even if you are fully covered by your current personal auto policy, you would still be responsible for the cost of the deductible should you be involved in an at-fault accident. With rental car coverage, your deductible is usually waived. Do the research – it pays.

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