If you travel, chances are you’ve probably rented a car at some point. At the rental car counter, they ask you whether you want rental insurance. Do you know whether your auto insurance policy covers you in the event of an accident, or worse, if the car is stolen? What kind of coverage does your credit card have? Does having an umbrella insurance policy provide any benefits? If you’re like most people, you’re unsure of what you need. In this article, we’ll discuss some common questions surrounding rental car insurance so you can decide what is best based on your circumstances.
TYPES OF RENTAL CAR INSURANCE
Supplemental Liability
This coverage pays for damages to other people’s property and injuries to other people in an accident where you are at fault. Liability insurance is required in most states, so if you have personal car insurance, you most likely have some coverage. However, if you carry the minimum liability insurance required by your state, you may want to consider adding supplemental liability insurance when renting a car.
Personal Accident
This coverage helps pay for medical costs you (or your passengers) incurred from an accident. If your auto policy covers medical expenses or everyone driving with you has health insurance, you don’t need this coverage.
Personal Effects
This coverage protects your personal belongings if damaged or stolen from your rental car. If you have homeowners’ or renters’ insurance, this option is redundant.
Loss-damage waiver
This coverage protects you financially against damage to the rental car and theft. Read the details on the waiver to understand exactly what is covered.
DOES MY CAR INSURANCE COVER RENTAL CARS?
If you have car insurance, chances are that policy covers you. Your car insurance typically provides the same type of coverage for your rental car as for the vehicle you drive regularly.
Your liability insurance will cover injuries or property damage caused by an accident you cause up to your policy limit.
Comprehensive insurance will cover losses on your rental vehicle if it is damaged by something outside of your control, like a tree branch falling on it. It would also cover the car if it were stolen.
If you crash into another car or a tree, your collision insurance will cover the damages.
Of course, your deductible will still apply when you file a claim with your insurer.
Even when you have car insurance, there may still be scenarios in which you want to purchase the car insurance offered by the rental agency.
SCENARIOS WHERE YOU NEED TO PURCHASE THE RENTAL INSURANCE
Business Travel
Your personal car insurance does not cover business use. If you are traveling for business, you’ll need to accept the rental car insurance offered (or pre-purchase ahead of time through your insurer). If you end up in a situation where there is a claim, your regular auto insurance won’t cover the damages.
You’re renting a car in another country
Your auto policy will likely cover you if you travel within the US or Canada. However, if you travel elsewhere, you may want to check with your insurance professional at Nicholas / Tobin Insurance to ensure you are covered.
You don’t own a car
It goes without saying that if you don’t own a car and don’t have car insurance, you obviously need rental car insurance.
UNDER WHAT CIRCUMSTANCES SHOULD I GET RENTAL CAR INSURANCE?
Rental car insurance could fill in gaps in your regular insurance. These are a few scenarios where you may consider taking the insurance or adding additional coverage.
You have high deductibles on your auto insurance policy
If you have a high deductible on your auto policy, you may want to consider taking the rental car insurance. Because rental car insurance policies typically have low or even no deductibles, your out-of-pocket expenses will be much lower if you are in an accident than if you rely on your auto policy.
You want to minimize claims on your auto insurance policy
If you are in an accident, that claim will go against your auto policy, while a claim on a rental policy won’t count toward your personal insurance. This might be especially important if you’ve filed multiple claims or have other blemishes on your record (such as speeding tickets) and you’re worried about a rate increase. Even one accident can potentially lead to an increase in your rates.
You don’t carry comprehensive or collision coverage
An accident could be costly if you have an older car without comprehensive or collision coverage on your personal policy. Comprehensive and collision coverage covers collisions, hail, theft, and fire. Adding a loss-damage waiver can help protect you financially against damage claims or robbery. Read the details on the waiver to understand exactly what is covered.
You carry a low liability coverage limit
Suppose you are carrying the state minimum liability. In that case, adding extra coverage with the rental car company will give you peace of mind that you are covered financially if you are at fault in an accident. A supplemental liability policy offered by the rental car insurance company will cover injuries, property damages, and damage to the car.
DOES MY CREDIT CARD PROVIDE RENTAL CAR INSURANCE?
Your credit card may provide coverage for your rental car, but you will need to check with your credit card company. If you plan to use a specific credit card for rental car insurance coverage, ensure that it is the card you use when paying for the car. If you are traveling outside the country, your car insurance may not cover you, so having insurance through your credit card company may be beneficial.
Another thing to remember is that credit card coverage is usually secondary to your car insurance. Your car insurance will pay out first in the event of a claim.
OTHER OPTIONS
CONSIDER THIRD PARTY RENTAL INSURANCE
You can purchase a standalone policy before you take your trip and rent a car. With a standalone policy, you can skip the insurance at the rental counter. These types of policies are less expensive than the rental car insurance you purchase at the counter, and they cover more as well. Make sure to decline coverage at the counter.
UMBRELLA INSURANCE
Suppose you are involved in a crash that is your fault with your rental car, and you exceed your liability limits on your personal auto insurance or homeowner’s insurance. In that case, your umbrella policy will pay the excess amount (up to policy limits).
Now you can approach the rental car counter with confidence, knowing what you need to be properly insured!
Nicholas / Tobin Insurance, located in New Milford, Connecticut, provides its clients with the highest-quality insurance products and services available today to protect them, their families, and businesses. We offer homeowners insurance, renters insurance, car insurance, business insurance, travel insurance, and more! Our commitment to service means our team of licensed insurance professionals is here to help with simple policy questions, consult with you to determine appropriate coverage, and be available 24/7 when trouble strikes and you need assistance managing through the claims process.
