The Facts about Rental Car Insurance
If you're renting a car this spring,
you'll probably be asked to purchase an insurance package from the rental car
company. Even if you're fairly confident that you don't need the insurance,
an agent can sound awfully convincing. Don't be put on the spot. A little bit
of research could save you from making the mistake of buying coverage you don't
need or foregoing coverage that you should have.
The best way to protect yourself
In general, the best way
to protect yourself when using a rental car is to purchase a regular automobile
insurance policy that explicitly extends collision and comprehensive coverage
to rental cars in any state or country. If you don't own a car and you rent
on a regular basis, you might want to purchase a "nonowner" policy
that will give you the same type of coverage. Unless you have an individual
policy that explicitly extends coverage to rental cars, you should be cautious
if you wish to avoid exposure to liability when renting a car.
Doesn't my credit card issuer
automatically insure me when I rent a car?
Many major credit card
companies claim to provide you with insurance coverage when you use their card
to rent an automobile. However, you should read the fine print or get written
verification from the company, because the coverage provided by your credit
card is not always full coverage.
Some cards only offer coverage if
you rent your car from a particular agency. Some limit the days for which coverage
is available. Some will only provide coverage for certain types and/or classes
of cars. With some cards, the coverage is not automatic and you must enroll
in a program to get coverage. Some cards that advertise automatic rental insurance
really only reimburse you for the deductible that you would have to pay under
your regular insurance policy. Still others may provide only collision and comprehensive
coverage, leaving you exposed for personal injury or property damage to others.
This is not to say that all credit
cards fail to provide the coverage you need when you rent a car. It merely illustrates
that you shouldn't blindly rely on your credit card issuer to protect you. Carefully
examine the terms of your credit card agreement, then act accordingly
What about coverage offered by
the rental agency?
The insurance packages
that you purchase from a rental car agency (typically called "loss damage
waivers") may or may not provide the protection you need. In your rush
to get out of the airport, you may not realize that the loss damage waiver you
purchased insures the rental car against theft, but not the contents. That could
be a big surprise when your laptop computer and expensive camera are stolen
from the rental car along with your luggage, and the rental agency rejects your
claim (check your homeowners insurance policy in this case--you may be covered).
Similarly, you may discover that the loss damage waiver you purchased for liability
only provides limited coverage. Further, many loss damage waivers exclude certain
items and/or situations from coverage.
Again, this is not to say that rental
car agencies are unable to provide you with the protection you need. It is merely
to illustrate that you should read the fine print, or get verification from
an agent if you have any doubts.
What if I have a regular policy,
but it isn't full coverage?
It is possible that you
have insurance on your personal car, but you don't carry collision and comprehensive,
or sufficient liability coverage. It may not be necessary to call your agent
and add all that additional coverage just so that you will be protected when
you rent a car in Mexico during your upcoming vacation. You can probably close
the gaps in your coverage using loss damage waivers and coverage offered by
your credit card insurer. However, as discussed above, you need to be cautious.
You want to be sure you are getting the coverage you need.
Other sources of coverage
If you have suffered a
loss that isn't covered under your auto policy, don't forget to check your other
insurance policies. For example, if personal property has been stolen from your
rental car, it may be covered under your homeowners or renters policy. Similarly,
certain medical policies may cover costs of injuries not covered under your
regular automobile plan.
