Since most personal auto insurance plans cover loss or damage to a rental car, many people decide to waive the optional insurance coverage add-ons offered by the rental company.
But is this really a smart thing to do?
Personal Auto Insurance
While most people’s personal auto insurance covers losses and damage to a rental vehicle, if their deductible is higher than the Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) coverage that the rental company is offering, the add-on policy can be worth the money, particularly if you’re driving in dangerous locations, narrow streets, or high-traffic areas that you aren’t familiar with. If your current policy covers liability only, consider adding extra collision damage.
Most personal auto insurance policies state that they’ll pay for only direct and accidental losses, not indirect ones, but your existing renters, homeowners, and even condominium insurance will usually cover any property that gets stolen from a rental car.
What Does Rental Company Insurance Cover?
Rental car protection isn’t really actual car insurance — it’s a waiver that transfers the responsibility of any financial damages to the renter. But it will typically cover theft or damage to rental cars, as well as the fees if the car is towed. Rental car protection typically costs $10 to $40 per day.
Supplemental insurance keeps rental companies from being sued in the event of a crash and ensures that rentals have, at a minimum, liability insurance in place. Supplemental insurance from the rental company will usually run between $9 and $16 per day.
Most Major Credit Cards Offer Rental Car Coverage
If you are really set against paying the daily fee for the rental car company’s coverage, another option is to pay for the car rental with your credit card. Many credit card companies offer some sort of rental coverage that is usually very similar to a CDW or LDW and can be used in addition to your personal insurance coverage.
Because every credit card company handles rentals differently, you’ll need to check with your company about its specific policy, which likely won’t cover indirect losses. And plan to fully pay for the rental with your card and deny the CDW or LDW at the rental counter.
Do Your Homework
Car insurance is required in most states, including Colorado, and failure to have coverage will not only leave you in danger of traffic tickets and fines, but vulnerable to being sued in the event of a car accident. Never drive uninsured, even if you have to pay the fee for rental car protection. Ten dollars a day costs much less than paying the damages related to a car accident lawsuit.
Before you rent a vehicle you should always check whether your personal insurance — auto, renters, homeowners, and credit card — does or doesn’t already have rental car coverage built into your policies. And remember: your personal insurance is not going to cover you if you violate the terms of the rental contract, no matter what type of insurance you have.
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