Should I buy insurance from the rental car company?

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Rental car counter
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Most everyone needs to rent a car at some time or another. Renting the car is the easy part; deciding on the age-old question that every rental agent asks — “Do you want car rental insurance?” — is the part that has many people making an expensive last-minute decision.

Money expert Clark Howard has some strong feelings on the subject. Read on to see how he says you should answer this question — and why.

Is car rental insurance really necessary?

That’s the number one question people ask. The short answer is “yes, it is.”

But that doesn’t mean that you need the coverage that your rental car agency is trying to push. Clark calls this coverage “overpriced semi-kind-of-insurance stuff that can take the cost of renting a vehicle through the roof.”

“The pseudo-junk can easily add up to $50 a day on top of what you’re paying for your rental,” Clark says.

There are some important things you need to think about before you waive the right to car rental insurance on your rental car agreement, however.

It’s important to know what car rental insurance purchased through the rental agency can cover:

  • Car rental insurance carries a waiver called a loss/damage waiver that releases renters from liability should their rental car be stolen, vandalized or damaged in a collision.
  • Car rental insurance policies can also include personal accident insurance, which covers medical costs for you and any passengers due to injuries sustained in an accident with your rental car.
  • Most car rental insurance policies carry personal effects coverage, which covers any personal items damaged in a collision or stolen from the rental car.
  • Car rental insurance policies also usually include liability insurance that covers third party costs for both medical care and property damage if another vehicle is involved in an accident and the fault for the accident lies with the rental car driver.

How much does car rental insurance cost?

Depending on what mix of policies you purchase through the car rental company, car rental insurance can cost anywhere from $10 a day up to $50 a day.

All car rental companies have different prices and different rental insurance policy options, so it’s important to do your detective work and find out the details on insurance coverage before you leave for your trip.

Although car rental insurance policies can carry great coverage, the truth of the matter is that you don’t usually need additional car rental insurance. Here are some things to consider before you purchase car rental insurance from the rental company you’re renting from.

Am I covered under my personal auto insurance policy?

“First,” Clark says, “check with your own automobile insurer and see if you’re covered for temporary use of a rental car.”

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Many personal auto insurance policies have addendums that cover a person if they’re renting a car from a car rental agency. Check with your carrier to see if your personal insurance policy contains this benefit before you go on your trip. Many of the best auto insurance companies offer this benefit to their clients.

The coverage is generally provided for 14, 15 or 30 days of a car rental and you’re covered just like you would be in your own vehicle.

If you are covered for a rental car under your personal auto insurance policy, it’s important to make sure your personal auto loan coverage includes both liability and comprehensive/collision coverage for the rental car. Many people have liability-only auto insurance policies and that may mean you don’t have full coverage for rental car insurance, either.

Am I covered under my current credit card benefits?

However, your personal auto insurance policy alone is not enough.

Clark explains: “When you rent car and you do have a mishap in that car rental — and remember it’s regardless of fault — the car rental companies have invented all kinds of other junk fees, including…’loss of use’ for the days that the car is out of their fleet.”

Clark suggests looking in your wallet to see if your credit card offers the added protection you need.

Many credit card companies will offer free rental car insurance as a benefit when you pay for your rental car fees with their credit card. Check online at your credit card company’s website under the card features and benefits section. You can also use the phone number on the back of your credit card to make a quick phone call to your credit card company to see if they offer this benefit.

Does my travel insurance cover my rental car?

Many people choose to purchase travel insurance when traveling, and many travel insurance policies do include coverage for rental car usage. Again, your credit card might offer travel insurance as well which could include rental car coverage. If you’ve already purchased travel insurance for your trip, check the policy terms to see if it covers the rental car(s) you’ll be using on your trip before you purchase a separate rental car insurance policy.

Final thought

Clark says that employees of some car rental companies are expected to upsell insurance to one out of every three customers. You can avoid that conversation entirely by using one of the automated terminals that so many rental companies offer for checkout these days.

“All you have to do is say ‘no’ and there’s going to be nobody that’s going to be twisting your arm,” he says.

All of that said, you do leave yourself at risk if you just assume that you’re covered. That’s why you want to talk to your own insurer to see what coverages you have from them and know that you have a credit card that does cover you when you rent a car.

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Listen to Clark talk about car rental insurance when you’re renting a car now (starts at 18:58).

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