Rental car insurance is kind of unusual. When you buy health, home, or auto insurance, you have time to look around for the right policy, deliberate, and plan ahead. But when you rent a car, the rental agent will hand you a form and ask if you want to purchase insurance for it. You might hum and haw for a few moments about whether to check the "Yes" or "No" box, but you probably don't have a lot of time to make the decision – especially if you've just flown into town and you need to be somewhere (if you are flying, see 6 Things You Should Know About Travel Insurance).
It can be all too easy to make the wrong choice when you're pressed for time. So, here are five rental car insurance tips that will help you walk up to the rental counter prepared to make an informed decision.
1. You May Already Have Coverage
Look over your personal vehicle insurance policy. Does it cover you Collision and Other Than Collision (also known as "Comprehensive")? If it does, chances are that protection will carry over to your rental car, with the same deductibles and limits. Call your insurance company to make sure the coverage will apply.
If you use a major credit card to make the purchase, you might just have added protection through your financial institution (and the benefits don't stop there – see 9 Insurance Perks Your Credit Card Provider Might Offer to learn more). The thing to remember is that this insurance is secondary. That means it will help you with the added costs that your normal insurance will not cover. Call the number on the back of your card before agreeing to the extra insurance the rental company is offering.
2. You've Got Four Options to Choose From
The rental car company will usually have four coverage packages to choose from. It's worth knowing something about each of them.
Loss Damage Waiver Coverage
This will protect your from damage or theft of the rental car while it's under your care. As mentioned above, if you have Collision and Comprehensive coverage on your personal policy, it might carry over and protect you from these perils. But note that you will still have to pay the deductible (learn about The Pros and Cons of Increasing Your Auto Deductible).
This will pay for any damages you cause to others while using the vehicle. If you have liability coverage on your own insurance policy, it should apply to your rental as well. You should really only consider this insurance if you only have minimal liability coverage under your personal policy.
Personal Accident Insurance
This insurance covers any medical costs you and your passengers incur from an accident while driving the rental vehicle. If you already have medical insurance, this would just duplicate coverage you already have.
Personal Effects Coverage
This will pay you if any of your personal items are lost or stolen from your rental. If you have homeowner's or renters' insurance, you might be surprised to discover that these items could already be covered by it, even if you're away from home.
3. It Doesn’t Absolve You from All Liability
The insurance you purchase at the counter will cover you for most incidents. But it won't completely remove you from liability.
First of all, you will still be responsible for your deductible. And, second, if you step out of the car for a moment while it's running and someone steals it, you can be held fully liable for the theft due to negligence.
Err on the safe side. Always treat your rental as if it were your own vehicle (for advice on keeping it safe, consider these 9 Ways to Keep Your Car From Being Stolen).
4. You Are Within Your Rights to Decline
Now, there is an important nuance here. Some states will require you to carry liability insurance even if you are driving a rental. If you don't have a personal auto policy, the rental company has you over a barrel: if you decline the liability coverage they offer, they don't have to rent to you.
So, as you see, you have every right to decline their policy. But if you do, it's up to the rental company whether they hand you the keys.
Keep in mind that if you are underinsured on your personal policy, you will also be underinsured in your rental vehicle. You may want to consider purchasing at least the Loss Damage Waiver. This will be added protection in case the rental is damaged or stolen.
5. Do a Thorough Inspection Before and After Rental
Insurance or no insurance, it's in your best interest to do a thorough inspection of the rental car before you drive it and after you return it. Walk around the car with the agent next to you and point out any damage, scratches, or deficiencies to the rental. Most of the time, they will have a form for you to fill out, often with an outline of a car so you can document where the current damage is.
If you skip this step, then any damage the agent spots when you return with the vehicle might be attributed to your handling of it. And the last thing you want is to be held liable for damage you didn't cause.
Be present for the final inspection. Document any damage, comparing it to the pre-inspection. If you're not present and the next driver spots damages, it could fall back on you since you were the last one to drive the car.
Whether you've just landed in another city, need a car while yours is being repaired, or don't own a vehicle of your own but want to take a road trip out of town, you're probably eager to finish the paperwork and get behind the wheel. But your insurance decisions can have serious financial consequences and you shouldn't make them on the spur of the moment. Keep these tips in mind so you can come to the rental counter prepared (still not sure? See Is Rental Car Insurance Worth It? for more helpful advice).
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