Understanding Rental Car Insurance Policies

If you’ve gone on vacation or out of town for a business, chances are you’ve rented car. Rental cars are more convenient than  taxis or calling an Uber every time you need to go somewhere. That’s not to say that they don’t have downsides though.

Renting a car isn’t all that different than driving your own. You have to avoid any dangerous situations or altercations that could damage the car. The only real difference in a rental car is it’s not yours.

If you’re in an accident, you’ll have to deal with the other party’s insurance company, the rental car company and their insurers. That’s where the insurance coverages you choose at the rental counter come into play.

You’ve heard the agent’s spiel about the insurance options they offer through the rental car company. Most likely, they try to talk you into buying as much coverage as you can. But how can you know if this coverage is necessary or if it’s just a waste of time and money?

To help you, we’re looking at a wide range of topics relating to rental car insurance. From coverage options to the benefits and downsides so you can make an informed decision the next time you need to rent a car.

Rental Car Insurance Options and Terminology

One of the ways rental car companies get you to buy more coverage than you need is by using technical terms. They’ll use complicated terms hoping to confuse or scare you into buying more coverage. The best way to safeguard against this, is to get familiar with the terminology.

For insurance coverage, there are four options available to you.

•  Collision/Loss Damage Waiver: This coverage offers what a regular auto insurance policy would, without it being an actual insurance policy. It’s a waiver that means the rental car company cannot come after you for payment if the vehicle is damaged or stolen. This waiver can range from $10-$20 per day.
•   Supplemental Liability Protection: This protects you from lawsuits if you’re in an accident that damages someone else’s vehicle or property.  This insurance is for the amount of $1,000.00 and would cost you anywhere from $5-$15 a day.
•  Personal Accident Insurance: This policy would cover you and any other passengers in the vehicle in the event you are injured while driving the car and need medical attention. This is a relatively low-cost policy, usually coming in at no more than $5 a day.
•  Personal Effects Coverage/Insurance: This coverage is designed to protect the belongings you keep in the rental car and reimburse you if they’re stolen or damaged in an accident. This is another cheap kind of coverage and shouldn’t cost more than $5 a day.

What You May Not Know about Rental Car Insurance

Now that we’ve covered the different types of policies you’ll be offered when renting a car, we can talk about some of the reasons you may not need them.

The first thing to consider is whether you have your own insurance policy. If you do, then you probably already have as much coverage as you need. Most people already have auto insurance policies that includes liability and collision insurance.

If this is the case for you, you’re probably already covered. The Collision/Loss Damage Waver from the rental company only duplicates that instead of adding to it.

The next thing to check is whether your credit card company offers any primary or secondary insurance for rental cars. Many credit card companies do, so it’s a good idea to give them a call to find out exactly what is covered and what isn’t. In some cases, your credit card may provide enough coverage. You wouldn’t need an insurance company at all. Or it may only cover you under certain circumstances and situations.

Another thing to keep in mind is arbitration clauses. These are tiny snippets of legalese inserted into contracts. When signed, they bind you to a private arbitration. It’s a situation gives the rental car company the upper hand.

The good news is you can opt out of the arbitration agreement. Call the rental company and say you reject the provision. This has to be done within a certain period of time before the rental takes place. So check with each rental car company to find out their specific policies.

Now that we’ve covered these options, it’s easy to see why you may just not need any extra coverage. You can save money by not buying the coverage. If you still doubt why you may not need any more insurance, consider the following:

•  Your current auto insurance policy probably covers rental cars and most of the situations that could occur. Call your insurance provider to double check.
•  If you have health insurance, there’s probably no need to buy any coverages specific to bodily injury. Your health insurance may cover accident-related injuries. Even if it doesn’t, you’ll be covered through your auto insurance if you have personal injury protection.
•  If you have a renters or homeowners insurance with off-premises coverage, your belongings are covered as well, regardless of whether they are in a rental car or your home. This eliminates the need for the personal effects insurance we outlined above.

 

Benefits of Rental Car Insurance

We’ve talked about why you may not need rental car insurance. Now, we’ll touch on the few considerations that may make it worth buying:

•  If you use the rental car insurance coverage, your regular auto insurance policy premiums will not suffer if you’re in an accident.
•  If you don’t have a personal car insurance policy, and don’t have a credit card that provides coverage, you need to buy some kind of insurance. This can be through the rental provider or a third company. You should never drive a rental without insurance.
•   If your car insurance policy does not have comprehensive and collision coverage, it could be a good idea to add the supplemental liability protection that the rental car company offers you.

 

Steps Before You Rent

If you’re about to rent a car,  make sure you have the coverage you need so that declining the rental car company’s insurance will not hurt you. Complete the following steps in preparation for your travels:

1.  Call your auto insurance company and ask them if rentals are covered. Get the full overview of what would be covered and what wouldn’t. Ask if there are any extra coverages you can add to your policy to ensure your safety.
2.  Call your credit card company and find out what coverages they offer and how filing a claim would work.
3.  Check with your health insurance provider or their website to see if you have a plan that covers accident-related injuries.
4.  Check with the company that holds your homeowners or renters insurance to find out if you have off-premises coverage.
5. Take your auto insurance policy card or declaration page to provide to the rental car company as proof of insurance.

A Few Extra Tips

As you prepare to rent a car for your next trip, here are just a few other tips to keep in mind:

•  AAA is a great service. They help if your car breaks down, you get a flat tire, or need a jump start. This service can be invaluable when renting a car, in a location you’re not familiar with or driving somewhere rural or remote.
•  If you damage the car or have an accident, get a copy of every document you sign or are given along the way.
•  If you’ve had an accident and are going through your own insurance, call them to file a report just as you would with your own vehicle.
•  Finally, take lots of pictures and document everything. It’s a good idea to have photo evidence of any damages so there can be no question about which parts of the car were affected.

We hope you’ve found the information and tips we’ve pulled together helpful. We want to make our client’s and friend’s lives easier and understand that traveling can be stressful. Perhaps now you a have a better idea of which coverages you really need and which are a waste of money.

Safe travels from Boller & Vaughan!