Purchasing a rental vehicle can be confusing. It is hard to know what your options are when you feel under pressure and you may not always have time to make an educated decision. For some people, car rental insurance is a necessity, but for others it’s paying for coverage you already have. When it comes to purchasing a rental vehicle, there are four major areas of coverage to consider: Liability Coverage, Loss of Use, Medical Coverage, and Personal Effects Coverage.
- Liability Coverage– This is required by every state in America and protects you from potential lawsuits. Here you have the option to purchase liability coverage from the car rental company or to use the limits on your personal auto insurance policy. Contact your insurance agent ahead of time to see if your insurance policy would cover your liability if you plan to rent a vehicle. If your policy does cover in the event of a rental, you may be asked to provide proof of insurance to them. If you choose to purchase liability insurance from the rental car company, it provides protection for up to $1 million, and costs between $7 and $14 a day. The benefit of buying liability insurance from the car rental company is that it protects you from having to file a claim with your own insurance and having that claim follow you for the next three to five years.
- Loss of Use– Loss of use occurs when you get in an accident and damage the rental vehicle so that it can no longer be rented out to other customers. This prevents the rental car company from making money with that vehicle and the rental company can press charges for responsibility. This is the only thing your personal insurance policy would NOT already cover. Rental car companies have a loss-damage waiver (aka collision damage waver) that typically waives financial responsibility if the rental car is damaged or stolen. This also covers loss-of-use charges while the rental is in the shop, towing charges, and related fees. This costs roughly $9-$19 per day.
- Medical Coverage– This is already included in your personal insurance policy and is subject to the limits you chose when your policy was written. If you have health insurance, consider declining personal accident insurance if your health plan covers accident-related injuries. If you choose to purchase personal accident insurance from the rental car company, it costs $1-$5 a day to provide coverage for medical and ambulance bills for the driver and passengers in the event of an accident.
- Personal Effect Coverage– If you have renter’s or homeowner’s insurance with off-premises coverage, your belongings are already insured before you stash them in the rental car. You could choose to decline this coverage as well. However, if you choose to purchase this coverage from the rental company, it would be approximately $1-$4 per day.
Rental car companies are not licensed insurance agents in every state. Instead, they offer a protection package. If you decide to purchase insurance through the rental car company, be sure to read the fine print. Every car rental agreement can be different, and you should be aware of what you’re signing. If you ever need advice or are unsure of your coverages, please be sure to give us a call!
Photo Credit: Mumby Insurance Brokers