The Ups and Downs of Buying Rental Car Insurance

When you last rented a car, were you pressured into buying additional insurance? Did you even know whether buying the extra coverage was a good idea? In many cases, the insurance options offered by rental car companies are completely unnecessary, and you may already be covered under your personal auto insurance plan. The reason that rental companies offer these types of insurance plans is that they’re very profitable. You can go from paying $15 per day to $35 per day with additional insurance. In this article, you’ll learn how to make an educated decision next time you need a rental car.

Collision Damage Waiver

One of the most expensive insurance options offered by rental companies is the collision damage waiver (CDW). This waiver basically protects you from having to pay damages in the case of an accident. While this waiver could save you from having to pay for repairs to your rental car, it’s likely that you’re already covered under your personal auto insurance. You may even be partially covered by your credit card company. Don’t make the mistake of obtaining this coverage if you don’t have to pay for it. Contact your insurance agent and credit card company to see if you’re already protected.

Personal Effects Coverage

Another way that rental companies try to squeeze more money out of you is by offering personal effects coverage. This covers any personal items that could be stolen from your rental car. You obviously would want to be protected against potential theft, but your personal items may already be protected under your homeowner’s insurance plan. While not as likely, your credit card company may offer this type of coverage as well. If nothing else, make sure to always lock your car doors, park in lit areas, and never leave anything in the car overnight.

Personal Accident Insurance

This is another type of coverage that may already be provided by your own auto insurance company. You can call your insurance agent to find if this coverage applies to rental cars. This is the most important type of insurance that you could have, as it protects you and your family – but you don’t have to pay for it unnecessarily. Doing a little bit of research or making a call to your agent can save you a ton of money on your car rental bill.

Liability Coverage

This type of insurance protects you against claims from third parties in case you’re involved in an accident in your rental car. Like many of the previous insurance types mentioned, you may already be protected under your personal auto insurance. One of the things to look out for, though, is whether your personal insurance covers your specific rental car. If you’re renting a newer and more expensive vehicle, you may have to pay for additional liability coverage. Also, if you don’t own your own car, you’ll probably have to purchase liability coverage from the rental company as a minimum.

The most important thing to remember is that you should always ask your insurance agent before paying for any additional coverage. Car rental companies make a ton of money by selling insurance, and they don’t particularly care whether you need it or not. Do yourself a favor and become educated about your options. It doesn’t take a lot of time, and a simple call to your auto insurance agent, or credit card company, can save from duplicating insurance you already have.

Photo credit: Barcelona Airport car rentals by Alquiler de Coches; Car Thieves sign by Elliott Brown/flickr

The author, Katherine Blackstone, is an insurance consultant who recommends checking online for cheap car insurance offered by some of the more popular providers, like Esurance, which provides discounts when you switch over from your current carrier.