Renting a car can be a convenient option, but deciding whether to purchase additional rental car insurance can be tricky. While many drivers assume their personal auto insurance or credit card will offer enough coverage, the reality is more complex. Experts weigh in on when it’s worth opting for the extra protection.
Sean Beasley, a frequent traveler who rents cars about 20 times a year, believes he’s adequately covered through his personal insurance.
“I don’t purchase additional rental insurance because my vehicle insurer automatically provides it as part of my policy,” Beasley explained.
He pays a monthly fee for rental coverage as part of his standard auto insurance policy, which he believes gives him sufficient protection.
However, according to Consumer Reports, there are often significant gaps in both auto insurance and credit card coverage when it comes to rental cars. Lisa Gill, an expert from Consumer Reports, cautions drivers about these limitations.
“Auto insurance and credit cards can have restrictions on rental cars, including which types of vehicles are covered, the duration of coverage, and the countries in which you’re protected,” Gill said.
One of the biggest drawbacks is cost. Rental car insurance can be expensive, sometimes adding up to $50 per day. So, when does it make sense to buy the extra coverage?
“If your own car only has liability insurance, you’ll need a separate policy for the rental car to cover any damage in the event of an accident,” Gill advised.
Guidelines for Deciding on Extra Coverage
Here are some factors to consider before deciding if you need additional rental car insurance:
Is the rental car more expensive or luxurious than your own?
Some credit card rental insurance and personal auto policies may not cover certain types of vehicles, such as luxury cars or large SUVs. If the rental vehicle is in a different class than your personal car, you may not be fully covered.
Are you renting in a foreign country?
If you’re renting a car outside the U.S. or Canada, you may not be covered. Major insurers like Allstate, Geico, Farmers, State Farm, and Progressive limit their coverage to North America. Similarly, many credit cards offering rental insurance have similar restrictions.
Are you renting specialty vehicles?
Vehicles like RVs, cargo vans, and moving trucks are generally not covered under standard auto or credit card insurance policies, requiring you to get a separate policy if you plan on renting one.
If you decide to purchase additional insurance, you’ll likely be offered up to three types:
Collision Damage Waiver (CDW): Covers damage to the rental car in case of an accident.
Loss Damage Waiver (LDW): Protects you against theft and damage to the rental car.
Liability Coverage: Protects you if you’re found legally responsible for property damage or injuries to others in the event of an accident.
Terms and coverage options may vary slightly depending on the rental agency, so it’s essential to review the specifics before making a decision.
Additionally, if you’re renting a car for work, it’s crucial to check with your employer. Personal insurance policies and credit card protections often don’t extend to business rentals, so you may need additional coverage.
In the end, determining whether to purchase extra rental car insurance depends on the specifics of your existing policy and rental situation. Make sure you know your coverage limits before hitting the road.
