So… you are going on vacation this summer and renting a car.  Before you log onto the rental car web site or pick up the loaner at the counter, you should think carefully about one of the first questions you will be asked – “Will you be purchasing rental car insurance?”
If you have auto insurance, the first phone call you should make should be your current insurance agent.  Explain that you are planning to rent a car and ask how your existing insurance covers damage to the rental car.  If your auto insurance includes collision and comprehensive coverage, then this should also cover the rental car within the limits of your current coverage.  But don’t stop there assuming that because you have auto insurance with collision and comprehensive coverage that rental car insurance is a waste of your money.

Paying a few extra bucks for rental car insurance may be one of the smartest things you can do!

Here are a few reasons why:

1. Immediate Payment Required:  Many rental car agreements may require immediate reimbursement for damages and it is customary practice for the rental car company to charge your credit card.  This can create problems for you such as significant debt, max out the card’s limit, etc.
2. Loss Of Use Charges:  Many rental car companies will charge you for their loss of rental fees while the car is in the shop for repairs.  This may not be covered by your auto insurance policy.
3. Diminished Value Charges:  Many rental car companies will charge you for the vehicle’s diminished value (if the market value of the vehicle is less than it was before the accident).  This may not be covered by your auto insurance policy.
4. Other Charges:  Many rental car companies will charge you for various other expenses such as towing, appraisal, claims adjustment, storage, etc.  These expenses may not be covered by your auto insurance policy.
5. Excluded Territories:  Will you be using the rental vehicle outside of the United States, Its Territories and Possessions, Puerto Rico, or Canada?  If yes, your auto insurance policy may not provide coverage.
6. Your Personal Effects:  Another thing to consider is coverage for your personal effects.  When traveling with digital cameras, laptops and iPods, the chance something getting lost or stolen while traveling is higher.  The costs to replace these items can really add up.  If you have homeowners or renters insurance, your policy may cover this.  But keep in mind your policy will only pay in excess of your policy deductible which may be as much as $1,000 or more.  Given the relatively low cost of personal effects coverage offered by rental car insurance, the additional insurance is worth it.
7. Risk Of Future Costs:  Your auto insurance policy most likely will include a deductible in the range of $100 – $500 or more.  Also, if you file a claim on your auto insurance policy for an accident you caused with a rental car… your auto insurance rates may be increased and you may even be at risk of being non-renewed by your insurance company.  It may be better to pay for the rental car insurance rather than risk years of higher auto insurance premiums.

Please feel free to contact us with any questions or for more information.