Do You Really Need Rental Car Insurance?

Everyone’s had it happen at the car rental agency; you’re at the counter ready to sign when suddenly you’re hit with those additional insurance costs. The question is: Do you need that insurance? Here are some tips to help you make that decision.

Is Rental Car Insurance Necessary?

Driving a rental car is like driving your own car; if you don’t want to get hit with a huge liability expense or car repair, auto insurance is essential. Ultimately, it is your responsibility to make sure you’re covered, so knowing your policy will save money and confusion at the rental counter.

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Rental Insurance Types and Costs

Rental agencies provide several types of coverage that vary in cost depending on the state, rental company, and car:

• Collision Damage Waiver (CDW), or Loss Damage Waiver (LDW) relieves your financial responsibility if the rental car is damaged or stolen (provided you’re not speeding or convicted of driving under the influence). This coverage typically costs $15 a day.
• Liability insurance costs between $9 and $14 a day and provides excess liability coverage. Since rental companies must only meet the liability insurance of minimum state levels, this policy covers the extra costs a serious accident could place on you.
• Personal Accident Insurance provides coverage to the driver and all passengers for medical bills and ranges from $1 to $5 per day. If your health insurance already covers you, this policy would be unnecessary.
• Personal Effects Coverage costs $1 to $4 per day and covers the theft of items in your car. Keep in mind, your homeowners or renters insurance may already cover this.

Alternatives to Rental Car Insurance

You may already have coverage for the above mentioned insurances. In order to avoid purchasing insurance that you don't need, t is important to know what is covered under your health, homeowner, and auto insurance policies.

What Does Your Auto Insurance Cover?

Before leaving home find out if your insurance policy includes rental cars. Ask the agent about two things: Collision damage waiver and liability. Your own auto insurance often covers driving a rental car. However, if you don't have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or damaged in an accident.

Does Your Credit Card Company Cover You?

Some credit cards cover theft and damage to basic rental cars (excluding SUVs and luxury cars). Check into the level of coverage your credit card provides since this could replace the need for the Collision Damage Waiver at the rental agency.

As we’ve just discovered, rental agencies offer several types of insurance, many of which you may already have. So avoid those unwanted surprises and expenses by knowing to what extent your car, health, or homeowner insurance covers you and your belongings before you head out of town.

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