Whenever you rent a car, you will be asked if you want to purchase the optional insurance coverage, which adds a significant amount to your total cost. What exactly does the insurance cover and do you need it?
What type of Insurance is Offered By Rental Car Companies?
A typical option offered by rental car companies is a collision damage waiver. When you rent a car, an agent will inspect the car and note any damages. When you return the car, you are responsible for any damage that was not noted before you drove away from the lot. The collision damage waiver is an agreement that the rental car company will not hold you responsible for any damages that occurred while you had the vehicle. Since a typical damage waiver can add $10-$20 to the cost of your rental each day, most renters would avoid adding it if possible.
Rental car companies may also offer supplemental liability coverage, personal accident insurance, or personal effects coverage, which would cover theft of personal items from the vehicle.
What Does Your Insurance Cover?
Most insurance policies cover you and members of your household if you are driving any vehicle, including a rental car. Your insurance will usually cover you as if you were driving your own car, which means that it would cover collision damage, property damage, and liability up to the policy limit. You will be responsible for your deductible, however. Your homeowner’s insurance may include theft coverage, in which case, the personal effects option offered by the car rental company is not necessary, Before travelling, check with your insurance agents for both your auto and homeowner’s policy to make sure you are covered, and to what extent.
If you do not have auto insurance or homeowner’s insurance, you will want to take advantage of the insurance options offered by the rental car company.
If you use a credit card to rent your car, you may have supplemental coverage through the credit card company. This insurance will generally offer secondary coverage, meaning that it will step in after other insurance options are exhausted. It may cover deductibles and damages above the policy limits on your other policies, but will usually not cover personal injury. Many card holders do not even know this benefit exists, so check before you travel to find out what your credit card company offers.
Some states have no-fault accident laws. In those states, all car owners are required to carry no-fault insurance which covers them for property damages and medical expenses up to a specified limit. In those states, the driver of the other vehicle will not be responsible for damages to your rental car, or for your medical expenses, in a minor accident, even if the accident was their fault. If you are travelling to a state that has a no-fault law, check with your insurance agent to make sure you have medical expense and collision coverage. Visit the website of a car accident attorney in the state to find out if the state has a no-fault law. If you do find yourself injured in an accident in a no-fault state, a personal injury law firm in that state can advise you of your rights.
Know Before You Go
The bottom line is, know the types of coverage and policy limits on your homeowner’s policy and automobile insurance policies before you travel. Call your credit card company to see what coverage they offer. If you are prepared before you get to the counter, you may save yourself some money.