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Auto Insurance Information Center

In Touch With 21st - October 2013

Do I Need Rental Car Insurance?


Rental Insurance Questions Answered

It’s usually the last step before you hit the road: picking up the rental car. You’re close to wrapping up the transaction, and the attendant asks if you will be purchasing rental insurance. Initially you may think it’s unnecessary, and decline. But look at the bigger picture: if you only have state minimum levels of coverage, an accident or theft could leave you responsible for thousands of dollars in damages. On the other hand, if your car insurance policy has higher levels of coverage you can probably decline. The decision should be based on the coverage you currently have in place.

Coverage through your personal policy

In many cases, a personal auto insurance policy may provide similar coverage for a rental car. So, if you cause an accident while driving a rental vehicle, your liability insurance would pay (up to policy limits) for damages to other drivers or property. If you have collision on your policy, it would pay for accident-related damages involving other cars or objects. Finally, your personal policy’s comprehensive coverage would take care of damages to the rental vehicle not related to a traffic accident, such as theft, hail or hitting an animal.

Coverage through a credit card

In addition to your personal policy, a number of major credit cards offer rental car insurance to cardholders. To be sure about whether the credit card you use to pay for the rental car provides coverage, contact your credit card company. Some cards provide coverage, but you need to understand the coverage limits involved. While many credit cards provide additional coverage, the types and amounts of coverage can vary.

For the coverage to apply, you usually have to reserve and pay for the rental car using that card. Note that terms and conditions can vary widely, depending on which card you have. Some cards offer primary coverage, which takes the place of your personal auto policy. Others offer secondary coverage, in which case their coverage would pay any remaining balances after your primary coverage is exhausted.

Coverage through the rental company

The benefit of buying insurance from the rental company is that it protects you from significant out-of-pocket expenses associated with loss or damage to the rental vehicle, including theft. The collision damage waiver, also known as optional vehicle protection or loss damage waiver, shifts the liability for collision damage from the person renting the car to the car rental company. If you decide to purchase insurance through the rental car company, be sure to read the fine print: most agreements are similar, but understand what you are signing, as you can be contractually obligated. For example, the agreement might only cover one driver, so that would prevent you from taking turns behind the wheel with a passenger. Don't be afraid to call the rental car company and ask questions before you decide on purchasing their insurance policy, as car rental agreements may differ.

Should You Purchase Rental Car Insurance?

There are different options available to drivers for insurance coverage when renting a vehicle. Whether through your personal policy, the rental company or the credit card company, make sure you have some form of insurance on the rental car. The last thing you want is to get into an accident and be underinsured, let alone uninsured.

Please note: This information is of a general nature for educational purposes only. It must not be taken as advice and does not signify an endorsement. 21st Century Insurance is not responsible for any injuries or loss incurred.

Sources: www.iii.org; www.naic.org; money.usnews.com

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