You will face a difficult decision when you are at the rental car counter: Should you pay more to rent the insurance and waivers of the rental company or save your money?
Before you decide to rent a car, it is important that you understand the coverage you have. While your personal auto insurance covers some damages to the vehicle you rent, it may not cover all of the damage the rental company is responsible for following an incident that is insurable. These expenses can be fully or partially covered:
- Rental car company may be losing money if the vehicle is not on the road or in the shop. Your insurer may be able to cover part of the financial damage if they provide a fleet utilization log showing that there were no other vehicles available for rent. However, they may not cover all of it. If you choose to waive rental company coverage, you will be responsible for any remaining amount.
- Diminution in Value:An incident can lower the value of a vehicle if it appears on its Carfax history report. You can pass this loss on to your insurer. However, your insurance may only pay the reasonable amount. If you refuse to rent from your rental company, you could be responsible for the rest.
- Administration fees: Additional manpower and time are required to work with you and your insurer on claims. These administrative fees are usually not paid by your insurance company and pass on the additional cost to you. These fees are usually waived if the rental car agency provides coverage.
- You should also be aware that rentals for business purposes and long-term rentals, as well as international rentals, may not be covered by your personal insurance. Before you assume your policy will cover you, call your agent.
The credit card that you used to rent the vehicle is another source of coverage. Credit cards generally cover the repair or replacement cost of damaged or stolen rented vehicles. Credit cards may not cover fees for loss of usage, diminution in value, or administrative fees. They may also exclude certain vehicles from their rental period. To find out more, contact the credit card company that you intend to use to rent.
What Rental Insurance and Waivers Cover
Most likely, the rental company will present you with options for rental insurance that can replace or supplement your personal coverage. Some examples of rental insurance options are:
- Collision Damage Waiver This basically acts as a hold harmless for any damage that you may have unintentionally caused to the rental car. Although it is not insurance, it means that the rental company will not pursue you for damages. Look at your collision and comprehensive coverage limits as well as your deductible to find coverage equivalent for your personal property.
- Theft Waiver – As long as you took reasonable precautions to protect the car, the theft liability waiver will hold you harmless if the rental car is taken. This would be covered by personal insurance within the limits and deductible.
- Personal Accident Insurance-Covers accidental deaths and medical expenses for the renter and the driver of the car. These expenses could be covered by your personal insurance policy.
- Liability insurance:If you cause injury to another person during an insurable event, your rental car’s coverage will cover the damages. This falls under your personal policy’s bodily injury and personal property damage liability.
- Personal effects coverage: Your personal insurance policy might cover personal items that were damaged or lost in a rental vehicle. You can also purchase personal effects coverage from the rental company.
Reimbursement and Getting Benefits
It can be very simple to file an insurance claim with your auto insurance company. You would file your insurance claim in a rental car the same way as if the accident occurred while you were driving your own vehicle.
You may be limited in the time you can file a claim for car rental coverage on your credit card.
Avoiding Rental Insurance
Let’s now look at the advantages of not taking out rental car coverage.
- You can save money by renting a car with rental insurance programs. This could double the rental cost. It may not be possible to double your expenses if you rent a car to save money or to travel on a tight budget.
- There are fewer feelings of waste. While people love to have insurance coverage in place when they have a case, most renters who purchase rental car insurance will not use it. This leaves them feeling like they spent their money. Although insurance coverage is not a waste, it can be frustrating to feel like you are wasting your money if you have enough and don’t use any of the extra coverage.
Benefits of Having Rental Insurance
There are many benefits to purchasing rental coverage.
- No deductible: If your high-deductible automobile insurance policy has a high deductible, you might consider renting car insurance to avoid having to pay the deductible for a vacation-related accident. Your auto deductible applies per incident, not per calendar year.
- There is no increase in premiums. A history of claims may cause your insurance rates to go up because you are considered a greater risk. You can avoid any claims by renting car insurance.
We can help you understand the various factors that go into renting car insurance and how it fits in with your personal auto policy.
