Your plane has landed in Miami and you find yourself 30 miles away from your hotel room. You are in town on business and are going to have to drive to several different locations over the course of your stay. You could call a cab every time you need to go somewhere, but that can get pretty clunky and may add extra time to your commute. Should you just rent a car? What about rental car insurance? It can be a bit confusing.
You find yourself standing in line at the rental car desk trying to decide between the cheap compact car and the nice sporty convertible. You are in Miami after all; you may as well fit in and enjoy the sunshine as you drive down the coast. You fill out the paper work, put in your deposit and the saleswoman is about to hand you the keys when she stops and asks you if you would like to add their rental car insurance to the bill. They will tell you how the insurance policy will protect you if the vehicle is damaged or stolen while in your possession. It sounds pretty standard right? The question is whether or not you actually need the rental car insurance.
The Huffington Post addresses the issue of whether or not you will need to purchase the rental car insurance by first asking drivers if they know what their liability coverage for their personal auto insurance policy covers.
To review, Liability insurance is part of a standard auto insurance policy that is meant to protect the purchaser from the risks of liability including things like accidents. Without liability coverage a driver can face financial hardship in the event of an accident that causes any sort of bodily injury or damage to the vehicle or property. With liability insurance, the coverage will compensate the other driver involved in the accident. All drivers in the United States are required to have liability insurance.
The guy standing at the counter of a rental car business may not know what his auto insurance policy covers. He could take a step back, let the next person ahead of him and give his independent auto insurance agent a call for clarification, but he is in a hurry so he charges the rental car insurance to his credit card and is on his way.
The problem is rental car insurance can cost you hundreds of dollars for your weekly car rental costs. If you have a car insurance policy it is likely that you will be able to turn down the rental car company’s insurance option, falling back on the existing policy you have on the vehicle that is sitting in your driveway hundreds of miles away.
If you think like the rental car salesman then you will be prepared for the pressured questions they may ask when you turn down their insurance offering. They will ask you if your insurance is adequate, if your deductible is high, and if you will be able to afford it if you do get in an accident with the rental vehicle. Most people do not know the answers to these questions off the top of their head. They just got off a three-hour plane ride, are tired and want to get to the hotel and get some rest. They also are very cautious. These questions make them think twice, and often times they accept the rental insurance coverage without any thought.
How do you know if your car insurance covers rental cars?
The Law Dictionary explains that it can be difficult to determine whether or not your car insurance policy includes rental cars. There are a couple things to look for:
- Do you have collision coverage? This pays for damages to your vehicle from accidents involving other cars or objects.
- If you don’t have collision coverage, does your auto insurance policy have a specific line that mentions whether or not non-owned cars are protected? Some policies will state this directly.
You can read through your auto insurance policy directly or you can contact your local independent auto insurance agent before taking a trip.
Back to the Miami scenario. Let’s say you are on a business trip, but you have family who lives in Tampa Bay. You are going to have a weekend free, but your company is not providing you with a rental car. You do not want to waste this opportunity to see your cousin Derek, who you have not seen in over a decade. You decide to rent a vehicle so you can make the four-hour drive up Interstate Highway 75 so that you can spend the weekend with him. Sounds like a great opportunity.
Well let’s take this scenario a step further. You have prepared for this, you know that your auto insurance coverage does not cover rental cars, but you also know that the rental car insurance that the company offers will cost you more than you are willing to pay. What other options are there?
Some credit card companies offer rental car insurance to cardholders. That example used in a U.S. News Money article uses a Visa Credit card. The card does offer an auto rental collision-damage waiver that provides reimbursement for damage due to collision or theft up to the cash value of most rental vehicles.
Credit car protection is meant to be a secondary coverage option. Often times the coverage will only kick in on theft or damages that are not covered by the insurance or reimbursement.
Is the rental company’s insurance all-bad?
No, there is an actual use for the rental car company’s rental car insurance plans. Often times the company’s may seem like they are trying to sell you on it just to make a buck, but if you do not have coverage through your personal auto insurance policy then yes, it is a smart choice to purchase. It will protect you from any significant out-of-pocket expenses associated with the loss or damage of a vehicle.
Rental car insurance typically costs $20 to $40 depending on the plan selected. The optimal vehicle protection will cost an additional $20 a day and makes the rental car company pay for any collision damage. General liability insurance, which covers up to $1 million in liability costs roughly $10 per day, but if you have an auto insurance policy at all then you will have the most basic liability coverage included.
How to prepare for renting a car
CreditCards.com has a great checklist for people to use before they find themselves standing at the rental car counter wondering whether or not they need the insurance. There are few questions to ask yourself about your existing car insurance policy. Your independent auto insurance agent will know the answer to the following:
- Do you have collision coverage?
- Does my policy extend to rental cars?
- Am I covered outside of the United States?
- Is there are limit to how long I can rent a car and still be covered?
- Are there any types of vehicle that my policy will not cover?
- Does my policy cover loss-of-use and other fees charged by the rental car company?
- How much liability coverage do I have?
If you are counting on the coverage that your credit car provides, then it is important to understand the restrictions it may have. Ask yourself the following:
- Do I have rental car coverage at all with my credit car and is it secondary coverage or primary coverage?
- Does it cover only collisions and thefts?
- What is the maximum dollar amount the coverage will reimburse me for damage?
- Does it cover a vehicle rented outside of the United States?
- Are there vehicle restrictions? (This is especially important when renting a moving truck).
- Is there a limit to how long you can rent the car?
- Does the policy cover loss-of-use and other fees charged by the rental car company?
After all of this is done, it is as simple as using the credit car that provides the coverage (if that is the route you have chosen). If you are comfortable with the coverage that your car insurance policy provides then you can decline the rental company’s collision waiver. You will also want to include the names of any other people that you expect to drive the car on the rental contract. Many insurance programs won’t cover a driver that is not on the contract.
No matter which coverage you chose it is a good idea to drive with extra caution when you are driving a vehicle that is not your own. Take the keys and enjoy your visit.
If you know that you are likely to rent vehicles in the future it is probably a good idea to contact your local independent insurance agent to find a car insurance policy that provides the coverage you will need to save you the hassle of purchasing the rental car company’s rental car insurance.
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