When you go to rent a car, you're usually offered a car insurance policy by the rental agency for your rental. And if you're thinking what I'm thinking, you don't want to spend the extra money for the insurance, but at the same time you're worried about something happening. Do you take the gamble?
The short answer is it depends. Let's help sort it out because we want you to enjoy your vacation or business trip without any worry or regrets.
The first thing you should know is the same coverage you have on your car insurance policy automatically extends to your rental car and the drivers listed on your policy. In some cases however, it still makes more sense to buy the extra insurance the car rental company offers. We have a few questions that can help you find out what's most cost effective for your situation.
- Is the rental car worth more than the car listed on your policy? Say you drive a Toyota Corolla and you decide to rent a Corvette. The coverage for your Corolla is probably not going to cover a claim on the Corvette in the event there's a total loss- the Corvette is most likely more valuable. So, if you're renting a luxury car, it's usually better to purchase the extra coverage offered through the car rental company. Ask the car rental company for the monetary value of the car you're renting or look it up yourself.
- What are your out-of-pocket expenses? As we said, the same coverages from your car insurance extend to your rental car, and that includes limits and deductibles. An insurance limit is the maximum amount of money the insurance company agrees to pay for a covered loss. Your deductible is what you agreed to pay out-of-pocket with each claim. If those exceed the expense of the rental policy, it might be better to opt for the extra rental coverage. More on this in #3. Be sure to read the fine print on the rental car company's insurance policy and it might even be smart to refer to your independent agent for sound advice here too.
- How long is your vacation? How long you need your rental can have an influence on whether it makes more sense to purchase rental insurance with the car rental company. Remember, the same deductibles from your personal auto policy also apply to the rental. For example, let's say you have a $1,000 deductible under collision coverage on your personal auto policy and you hit a pole in the rental car. The portion you pay on that claim is $1,000. Typically, you can purchase the CDW (Collision Damage Waiver) from the rental car service for around $16.99 per day. So, purchasing the waiver for a 7-day trip is definitely more cost effective than paying a $1,000 if you have a collision claim. Again, just make sure you read all the fine print.
- Who's Driving? Sometimes you can use credit card points to pay for a car rental. That may also include insurance coverage for the rental. Just be sure whoever may be driving the car, like another family member, is included as an authorized user on the credit card account with the benefit. Otherwise, a claim that occurs while that person is driving may not be covered under this benefit. Also read the fine print! You may only get the coverage if you use that credit card to pay for the rental.
We hope these questions help you determine the best decision for you when renting a car this summer. If you don't have insurance through NNINS, consult your own insurance carrier for how your car insurance policy works with rental car coverage.