There are three main types of rental car insurance coverage. When you decide to arrange for a rental car, it’s important that you also make the right choice about protecting yourself from financial responsibility if you are involved in an accident. The types of coverage are described below.
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The first type of rental car coverage is if you are covered under your present car insurance policy for rental car usage. Second, if you used your credit card to pay for the rental, the insurance available on purchases may extend to liability coverage for the rental car as well. A third type of rental car insurance coverage is to buy the plan offered by the agency when you pick up the vehicle.
Your Existing Car Insurance Policy
Before you decide to decline the rental agency’s coverage and rely on your own policy to protect you, contact your car insurance company or agent to confirm that you are covered in this instance. Since most states require a driver to have liability coverage in place, this coverage will pay for medical bills, lost wages and other expenses incurred by the occupants of the other vehicle if you are the at-fault driver in an accident.
Your collision coverage will pay for damage caused to the rental car.
If you have comprehensive coverage in place, it will look after damage caused by incidents of fire or vandalism. It will also pay a benefit if the rental car is stolen.
Coverage With Your Credit Card
Your credit card may have the added benefit of offering insurance, either at no charge or at a discounted rate. Before choosing this option, ask the card company to confirm the details of the coverage it offers. The best choice is to ask to have this information sent to you so that you can read the insurance contract yourself.
You will want to be sure that the protection offered by the credit card company covers the other vehicle in the accident, and not just the rental car. Bodily injury liability coverage is also important, and you want to be sure that the coverage addresses this as well.
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Insurance from the Car Rental Agency
The car rental agency will offer insurance coverage before you drive off the lot. You need to read the agreement carefully so that you understand what you are buying (or turning down). The car rental agency may offer something called a Loss Damage Waiver and a Collision Damage Waiver. Choosing these options mean that if a loss occurs, your insurance company would not be responsible for paying for the claim. You may still need to pay a deductible, though.
In some cases, the car insurance company will not pay out on a claim if the accident was caused by some act of negligence on your part, such as driving at an excessive rate of speed.
Driving under the influence of alcohol and/or drugs may also void this coverage.
You may want to consider buying Loss Damage or Collision Damage coverage if you don’t currently carry that protection on your own vehicle. Another situation where this protection can make sense is when you don’t have car insurance.
If you live in a state with relatively low minimum levels of coverage for bodily injury liability, you may want to supplement your existing policy by purchasing Additional Liability Insurance coverage. The car insurance company’s additional coverage may give you up to $1 million in protection.
Another factor to consider before automatically turning down the car rental agency’s offer of coverage is that if you do so, any claims made will be made against the agency’s coverage first. Only if the damages are not covered by it will you need to look to your personal car insurance company to pay out. While your insurer may learn about the accident, you will not be adding any claims to your record.
The car rental agency may also offer to cover loss of your personal property that is being transported in their vehicle. You would be entitled to compensation if your personal effects were stolen.
The key to making the right decision about buying rental car insurance is to find out exactly what coverage you currently have in place through your existing auto insurance policy. Then consider what your credit card company can offer you for car insurance coverage. Once you know what level of coverage is already available to you, you can make a good decision about whether to buy coverage from the car rental agency without paying for coverage you already have in place.
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