Car Rental Tips: Understanding Your Insurance Policies
When you rent a car, you need to be covered by auto insurance whether you own a car or not. If you own a car and have a solid insurance package that covers auto, health and home, you may not need to purchase insurance from the car rental company like this. The first thing you need to do before you pay the high rates for insurance that the rental companies offer, is learn, in detail, what coverage you already have.
✔ Check your own auto insurance coverage
You can call your insurance company or look at your car insurance policy to find out the amount of coverage you have. If you are renting a car for personal use, the limits and deductibles will most likely apply to your rental car. If you are renting a car for commercial or business use, your personal car insurance may not apply. You also need to ask about additional drivers of the rental car who are not on your personal policy.
Even if you have auto insurance that covers rental cars, it will only cover the value of your car, not the full value of the rental car. You could have to pay the difference in damage responsibility if you have a collision.
✔ Check your credit card
If you use a card to pay for the rental car in full, that credit card company may give rental car insurance coverage for a car but not usually for a camper, truck or exotic car. There may be conditions such as informing the credit card company within a certain period of time after a collision. You also must decline the rental company’s collision waiver. Credit card plans typically cover for rentals of up to one month, not long-term. Also, the coverage may not apply in a foreign country.
✔ Rental car insurance
If you are not covered by your own car insurance or by your credit card, rental car insurance is a good idea. It costs more than regular insurance, but far less than paying for damages in the event of an accident.
In most states, car rental insurance is required by law to cover:
• Collision damage waiver (CDW) that means you have no liability for any damage to the rental car even if your own auto insurance covers it. The liability is shifted from you to the car rental company. This costs up to $19 per day and also covers the loss-of-use fee you would be charged if the rental car could not be rented because of an accident. The CDW would be voided if you were driving on unpaved roads or illegally.
• Liability insurance covers up to $1 million and costs from $7 – $14 per day. You may not need this if you have your own insurance policy. Most states require car rental companies to cover a minimum amount of this at no cost to the customer. You need to decide it that amount is enough.
• Personal accident insurance will cover ambulance and medical bills for any passenger. It costs from $1 – $5 per day. This is not necessary if your passengers have good health insurance coverage of if you have personal car insurance.
• Personal effects coverage is for items that are stolen from the car. It costs from $1 – $4 per day. If you have a floating policy under your home or renters insurance, you are protected everywhere.
If you plan to rent a car abroad, it may be cheaper to get coverage before you travel than to pay the very high fees the rental car company will charge you. If you are insured on a rental car in a foreign country, you need to take proof of this with you.