A recent report states that the car rental industry in the United States gained nearly five percent in revenue from 2015 to 2016. One way these businesses make money is by selling add-ons and upgrades, such as prepaid gas, car seats and, of course, insurance.
Whether you are renting a car for vacation or need transportation while your vehicle is in the shop, you might wonder if it’s wise to go ahead and spring for rental car insurance.
The right answer depends on several factors that may differ from one individual to another. Learning what to consider can help you determine whether you need rental car insurance and, if so, what kind.
Check Your Credit Card For Coverage
Some major credit cards offer rental car insurance as an added benefit, provided you use that card to pay for the rental. After you find out whether your card provides this perk, be sure to read the fine print. Some cards will not insure specific types of vehicles, such as trucks, vans and SUVs. Others only provide coverage for two weeks, or only provide certain types of coverage.
Check With Your Regular Insurance Provider
Many personal auto insurance policies offer some level of coverage when you rent a car. However, there are exceptions and caveats you should find out about as well. As with credit cards, your insurer might only cover certain types of vehicles in specific circumstances. Even then, the coverage may not be comprehensive. Call your insurance agent to clarify exactly what coverage you have before heading to the rental car counter.
Types Of Coverage
Laws regarding the type of rental car insurance coverage you need vary by state. Car rental companies have their own requirements as well. Even if your credit card or personal insurance policy provides the essential insurance you need, you might want to purchase additional coverage from the rental agency or through your insurance provider to ensure you are protected in multiple ways.
Loss Damage Waiver
If your credit card or personal insurance policy covers car damage and liability on the vehicle you’re renting, you can sign a Loss Damage Waiver—also called a Collision Damage Waiver—to turn down the rental agency’s basic coverage. However, if you don’t have your own coverage or want to avoid potentially raising your insurance rates in the event of an accident, you may want to spring for this protection.
Many rental car companies suggest that you purchase supplemental liability insurance, even if you have coverage through your credit card or insurance provider. This insurance may cover those special circumstances your card or insurance does not, such as accidents on an unpaved road, damage to wheels and tires or a rental lasting longer than 15 days. Having a clear understanding of the coverage you already have can help you decide whether this add-on is worthwhile.
Personal Accident Insurance
If you have an accident that injures you or your passengers, personal accident insurance will pay for the medical bills. As long as you have health insurance, though, you likely already have protection for any potential ambulance, hospital and prescription costs you may incur. Your car insurance may cover these costs as well.
Personal Effects Coverage
Personal Effects Coverage will reimburse you up to a set amount if your rental car is broken into and your personal items are stolen. If you are traveling with costly items, such as electronics or jewelry, check your homeowners or renters policy to see if you are already covered.
Doing your homework in advance will help you discover how much coverage you already have access to and decide whether you need more. Ultimately, the right answer depends on your budget and your peace of mind.