Should I get insurance on my rental car?

To get insurance or not on a rental car– that is the question! If you’re like us, finding a clear answer to this decision after you’ve spent the day flying and waiting in lines at the airport can be convoluted. 34% of respondents from a recent survey of nearly 1,000 people indicate they go for the added insurance although 42% reported that they were confused about the coverage to begin with.

Let’s not make this complicated and cut right to the chase: If you have a history of being a responsible driver and are in good standing with your insurance company, by declining the added insurance, you could save hundreds of dollars a year if you rent a vehicle frequently. If you forego the added insurance, in the event of an accident, your normal insurance would likely cover the damages per your current insurance policy. However, your rates can go up for the next several years from even a single incident so lets look at some of the reasons why you would consider insurance…

*By purchasing insurance on the rental car, the temporary insurance will act as the primary insurer, alleviating you of having a rate increase on your normal insurance or having to pay our of pocket for an accident. A scratch, a ding, a shopping cart into your rental car? That’s usually not a big deal to big car rental fleets -if you’ve purchased their insurance. If you haven’t, you can expect a claim to be filed by the rental car agency or you may even need to pay out-of-pocket for the damages for something minor.

A few notes & our tips:

• If you do not carry comprehensive or collision on your current auto policy you WILL NOT have comprehensive or collision on your rental vehicle through your normal provider and therefore you should strongly consider accepting the rental insurance coverage.
• Many credit cards come with a no-cost rental car collision coverage, but not all cards are alike so make sure you understand the coverage restrictions before refusing coverage at the rental car counter.
• You may be able to negotiate the daily cost of the rental car by adding their insurance. This has happened to us several times.
• You may also save money on the rental car by presenting your Triple AAA rewards club card, an AARP card or by inquiring if they have an education discount (usually for teachers, rarely students). The end results of your negotiation could be similar to paying the regular cost of the car rental AND having their insurance for just a few additional dollars.

*Rental car insurance offers four important coverages:

1. Loss Damage Waiver (LDW), also referred to as collision damage waivers and is not technically an insurance product—it relieves or “waives” renters of financial responsibility if a rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car cannot be used because it is being repaired. It may also cover towing and administrative fees. Loss damage waivers cost between $9 and $19 a day.
2. Liability Protection provides financial protection from lawsuits in the event you are sued following an accident involving a rental car. While by law, rental companies must provide the state required amount of liability insurance, generally, these amounts are low and do not provide much protection. Furthermore, the company has the right to recoup any monies it pays out from the renter. You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car. If you decide you want the supplemental insurance, it will cost between $7 and $14 a day.
3. Personal Accident Insurance will cover you and your passengers for medical and ambulance bills incurred by injuries in a car crash. If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day.
4. Personal Effects Coverage provides insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. Personal effects coverage generally costs between $1 and $4 a day.

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