Can’t you just see yourself in that long line of motorists waiting at the local car rental company? It’s finally your turn, and the entire rental process takes minutes on end to finish. Then the agent asks you if you want insurance for your rental car. Suddenly, you panic. You do need insurance for a rental car, don’t you? Or do you? Have you heard some conflicting information about rental insurance?
In truth, you are not obligated to buy that insurance, as long as you have your own liability coverage. What often happens is that the motorist fails to plan ahead and then decides, on an impulse, to take a regular insurance policy with the rental company.
After all, when you are standing at the car rental counter with a line behind you you do feel a certain pressure. All the more so, if you get a “smart” agent who informs you that driving without insurance is dangerous. You make a hasty—and expensive—decision all the while never knowing the answer to the question. Don’t get pressured into making a snap decision that you may regret. Do your research by continuing to read below and then do your own car insurance comparison.
Do You Need Insurance for a Rental Car?
You will notice one thing—the insurance agent you deal with will never require you to purchase insurance for the car. Renting a car is not like driving an automobile on a regular basis. You do have the right to refuse car insurance, on the basis of having your own liability insurance policy. Most of the 50 U.S. states require that you have a minimum amount of liability coverage. In some cases, though not all, the liability policy you currently pay, will protect you for a rental car.
It is important to note however that a lot of insurance companies are changing their policies and are not accommodating rental cars under their new terms. Therefore, instead of presuming that you’re covered for liability, why not call the insurance company and verify before declining renter’s liability insurance?
Credit Card Companies and Insurance Providers
Another issue is that of credit card companies. Some credit card companies have special terms that cover liability or damage waiver policies for rental cars. However, it is definitely a mistaken notion to assume that any Visa or MasterCard will cover your rental vehicle. Some of the gold or platinum cards offer this protection. Remember though, that banks are the party that issue the credit card and work out the terms. The credit card company itself has no universal standard regarding what insurance policies are covered. While some credit card programs offer free protection against theft or damages to a rental vehicle others do not. Some may only agree to pay partial damages; namely, whatever the traditional rental insurance company doesn’t cover.
The rental car insurance agency will verify that you have a license, credit card and possibly a liability insurance policy. They will then offer you a “collision damage waiver policy”. This is not technically an insurance plan, but an agreement that shifts liability for any damage that occurs to the vehicle from the renter to the rental company. This is a product that usually costs approximately $20 a day. (Perhaps more for an expensive rental vehicle)
It should be noted that just because you have a collision damage waiver does not mean you are totally scot-free if the car is destroyed. If you were doing anything illegal or driving in a dangerous situation, the contract could be voided and you could still wind up owing for damages.
Should You Purchase a Collision Damage Waiver Contract?
You are not obligated to take a collision damage waiver at any time, but if you do not, you will be responsible for paying all of the damages on the car, from minor scratches to major on-road collisions—even if they are not your fault. You also have to consider personal accident insurance, which covers medical and ambulance bills for all of your passengers. This damage may or may not be covered by your healthcare plan. Personal effects coverage protects you in the event of theft, but sometimes this coverage is included in a homeowners insurance policy. These are all plans that are offered by rental companies, but are still optional to the driver.
Bear in mind that the liability insurance coverage offered by rental companies is usually not enough to cover serious accidents. Therefore, given the fact that both the liability and damage waiver policies offered by the renter might be inadequate, it might suit you to order additional auto liability insurance for rentals from your own insurance company, or from a new insurance company on a temporary basis. This is sometimes called a non-owner auto liability insurance policy.
What you should do is call your credit card company and make sure that their regular terms do not cover liability or a damage waiver contract. Second, call your insurance company and verify coverage information. The final step is to search online for a renter’s insurance policy. Rather than succumbing to the pressure and ordering multiple insurance policies from the rental company, why not order your policy online for a substantial discount? You can use our free car insurance comparison tool right now and compare car insurance rates!
