Planning a trip? Sometimes it’s not about the destination, but the journey and sometimes that journey involves a rental car.
If you will be renting a car there will come a time when the rental car agent asks you if would like insurance from them. Many people when faced with this question wonder if the additional insurance is something they need, or if their own car insurance will be enough.
Here are the typical rental car coverage options:
Collision damage waiver can free you of financial responsibility if the rental car's damaged or stolen. It can also cover loss-of-use charges while the rental's in the shop, towing charges, and related fees. Typically this will cost $9-$19 a day.
Liability coverage will be required. If you have your own car insurance you can opt out of this, but if you do not have liability coverage you will need this which only costs around $7 to $14 a day.
Personal accident insurance covers medical costs in the event of an accident. While this is not required, it’s something you will want to make sure you have. As mentioned above, if you have enough of this on your car insurance coverage you can opt out, but if not opt in for about $1 to $5 a day.
Personal effects coverage insures your personal belongings in the rental car. Typically you will have this coverage with your home or renters insurance policy. If you do not have home or renters insurance policy, you can obtain this coverage for $1 to $4 a day.
Coverages to consider:
Everyone’s car insurance policy is customized so the first thing you should do is call your insurance agent and have a conversation with them about your coverage. Your insurance agent can help you determine if you have gaps between what you need to cover when renting and what your car insurance covers. The three most common areas where you will find a gap between your car insurance and the rental car coverage are replacement cost coverage, loss of use, and depreciated value.
Replacement cost coverage is if you total the car there could be a difference between what your policy would give and how much it costs to repair or replace.
Loss of use is the time when the rental company would lose money due to “loss of use” of that car in the event that you total it or cause considerable damage.
Depreciated or diminished value refers to a situation if you have an accident in the vehicle and the car is now worth less than it was before. From the rental car company’s standpoint they can now get less for the vehicle if they decide to resell because of your accident.
When to Opt for the Coverage:
You will be required to have some car insurance coverage before renting a car. If you don’t own a car you most likely will not have your own car insurance. In this case, you will need to opt for the rental car insurance. Another situation to get the rental car coverage is if you are leaving the country. Your car insurance will not cover you if you are leaving the United States so in order to get coverage you should obtain coverage from the rental company.
If you only have commercial insurance that will not extend to your rental car. If you do not have a personal lines car insurance policy, opt in for the rental coverage. On the other end, if you are renting a car for commercial or business purposes, you will also need to opt in if you only have personal car insurance.
Last thought: Don’t forget to call your credit card company! If you will be charging your rental to one of the four major credit card companies (Visa, American Express, MasterCard, and Discover) call them before you decide on coverage. They all offer some form of rental car insurance coverage.
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