When you rent a vehicle, whether, for one day or one month, you will be given the option to purchase a collision damage waiver. Commonly referred to as “rental car insurance,” this coverage is an in-house agreement between you and the rental company that releases you from liability for damages to the vehicle. Since you do not want to be on the hook for replacing a $30,000 vehicle, you might automatically assume that taking the rental car insurance is a good idea.
However, you may not need as much coverage as you might think. Continue reading to find out more about collision damage waivers and the alternative sources of rental damage coverage you might already have at no added cost.
What is a Collision Damage Waiver?
A collision damage waiver is a contract that says the rental company will be responsible for financial losses stemming from damages to your rental car. Though there are often exclusions, the collision damage waiver can provide peace of mind when you drive off the lot. Unfortunately, it is also somewhat expensive. Signing up for the rental company’s coverage could cost increase your rental costs by as much as 60 percent or more per day.
Alternative Sources of Rental Damage Insurance
Why pay for extra coverage if you already have it? Many drivers who rent cars are protected against rental car damages, although many do not know it. Before you purchase the collision damage waiver, check with the following sources to find out if you can file a claim for damages to a non-owned vehicle. You may even be able to use a combination of more than one coverage source to minimize your out-of-pocket costs.
Your Personal Line of Auto Insurance
Personal insurance is one of the most reliable sources of rental car coverage since the collision and comprehensive protection likely follows you when you drive a rented vehicle. You might still be responsible for paying your deductible, but it is a small price to pay compared to the cost of reimbursing a rental company for all of the damages yourself.
Another consideration is that if you damage a rental car, you may be responsible for the full replacement of that vehicle. However, your personal car insurance policy may only cover the actual cash value, leaving you responsible for the difference. Check with your independent agent to verify the extent of this coverage and any limitations that may apply.
Credit Card Benefits
If you’ve never read the benefits in your credit card brochure, now may be the time to do so. Many credit card issuers offer free rental car damage protection when you use their card to reserve and pay for a rented vehicle. There may be some restrictions. For example, you may be required to decline the collision damage waiver, and you may have to file the claim on your personal auto insurance first. However, secondary coverage from a credit card might pick up the bill for any out-of-pocket losses left over after your insurance has paid – including your deductible.
Umbrella Insurance
If you have an umbrella policy, there is a chance that rental car damages may be covered under the policy. It is important to note that not all insurers will cover rental cars on an umbrella policy, and those that do will likely charge a self-insured retention before paying any benefits. However, this could be a viable source of coverage if other options fail.
As you can see, there are many things to consider when you ask the question Do I Need Rental Car Insurance? Generally speaking, we believe the reasons to purchase rental car insurance outweigh the reasons not to. If you have questions, please feel free to call our office, we’d be glad to help.
