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Auto Rental Insurance: To Buy or Not to Buy?

If you are like most visitors to auto rental counters, you have already been faced with the dilemma of whether or not to purchase some form of auto rental insurance when you rent a car. Often, people purchase the expensive rental insurance instead of cheap one, just to be safe, when they actually are already covered under their own car insurance policy or as a perk offered by their credit card company when they pay for the rental with a credit card.

Since purchasing auto rental insurance can really hike up the price of renting a car, you can save a lot of money by doing a little preliminary research before you get to the rental counter. Start by reviewing the terms of your existing auto insurance policy to see if it provides any form of rental coverage. Although auto policies and their quotes do vary, most policies' liability coverage tends to follow the insured driver no matter what car they drive. This means that you would be as fully insured driving a rental car as driving your own car, when it comes to liability protection.

Another thing to assess is whether the comprehensive and collision coverage on your existing auto policy is sufficient to cover a fairly new rental car. Many people drop such coverage to reduce insurance premiums when their cars depreciate below a couple thousand dollars, while a late model rental car might be worth ten thousand dollars or more. Accordingly, it would seem prudent to purchase the rental car company's collision damage waiver which would give you additional comprehensive and collision coverage in case the rental car is stolen, vandalized or damaged in a collision.

However, an exception to this recommendation would be if you have a major credit card that provides this sort of coverage to their cardholders when they choose to waive the rental car company's coverage and use their credit card to reserve the car and to pay for its rental. For example, Visa provides this coverage as a secondary supplement to your existing car insurance for free for a couple of weeks, although some restrictions do apply. MasterCard offers similar secondary coverage, and American Express even offers primary coverage for $25 for those who want to rent for longer terms or want to rent vehicles that are otherwise not covered. Knowing this can save an auto renter hundreds of dollars on insurance costs for a longer term rental.

Furthermore, if you plan on renting a car long term, then another important thing to look for in your existing auto policy is whether it has a limit on the number of days that you will be covered driving a rental car. This limit is often under 30 days, so make sure you check this limit with your car insurance company, especially if you will be renting for more than a couple of weeks.

If, after doing your homework, you still decide to go ahead and purchase auto rental insurance then be sure that you know what you are buying and what it is going to cover when you are at the rental desk. Coverage types offered by rental companies generally include the following:

  • Damage waiver - provides coverage if your rental car is damaged or stolen, although restrictions may apply. You might already be covered under your auto policy.
  • Supplemental Liability - gives you extra liability coverage if someone files a claim against you that exceeds your regular policy limits while you're driving a rental.
  • Personal Effects Coverage - insures your personal property, but you might already be covered by your homeowners or renters insurance policy.
  • Personal Accident Insurance - insures your person against injury while you are driving, but you might already be covered by your health insurance policy.

Basically, you can save a lot on insurance costs and rates, without compromising your peace of mind, if you ask the right questions and verify exactly what coverage you really need before paying for additional insurance from your car rental company.

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