What do you know about rental car insurance? Did you know it can raise the price of your car rental by more than 60 percent? Did you know it is an optional coverage that you can decline at your discretion? Whatever you already know about it, it’s probably what you don’t know that could cost you. Before you decide for or against the damage protection offered by your rental car company, make sure you understand the details surrounding your coverage options.
It’s not really insurance.
One important consideration is that rental car insurance is not actually insurance at all. Rental companies are not licensed to sell insurance. Instead, they sell in-house agreements called collision damage waivers that assure borrowers they will not be pursued for damages to a rental vehicle caused by a covered event.
You probably have access to similar protection elsewhere for free.
Despite the pressure you may feel to purchase coverage from the car rental companies, there are many options when it comes to protecting yourself against damages to a rental vehicle. To start, the collision and comprehensive protection on your personal car insurance probably cover damages to a rental car, although you will still be responsible for paying your deductible. In addition, you might have access to rental car damage protection via the perks on a major credit card so long as you reserve and pay for the vehicle with that card.
It doesn’t cover liability.
Collision damage waivers only protect the financial interests of the driver as it pertains to the rental car company’s losses. While you may be covered against damages to a rental vehicle, you will need separate coverage for bodily injury and property damage liability. If you already have a personal auto insurance policy, that coverage probably extends to your rental car. If you do not have car insurance because you do not own a car, you will need a supplemental liability policy in addition to the collision damage waiver while you are in possession of the vehicle.
It might contain exclusions.
A collision damage waiver does not actually pay for rental car damages like insurance would; it merely absolves you of the responsibility to pay it yourself. Instead, the loss is transferred to the rental car company who agreed not to pursue you for damages in the waiver. However, that does not mean the rental car company would prefer to pay for damages if it doesn’t have to. In many cases, these companies create exclusions within their agreements that void the contract in certain circumstances. This might include damage from an accident prior to which you were speeding or a theft that occurred when you left the vehicle running unattended in a parking lot.
It could save you a lot of claim frustration.
Your rental car agreement might state that you agree to take responsibility for the rental car company’s losses if you damage or lose the vehicle during the rental period. Even if the damages are covered by your personal insurer, the rental company might charge your credit card for the loss until it receives reimbursement from your insurance company. With the damage waiver, you do not have to float thousands of dollars in charges or pay interest on a high credit card balance while you wait for the claim to be settled.
It might save you money on deductibles and future premiums.
If you are in an accident while driving a rented vehicle, you may or may not have to file a claim on your personal insurance. It all depends on whether there were any injuries or damages to property other than the rental vehicle. In cases of isolated damage, having a collision damage waiver means avoiding a claim on your personal auto insurance that might otherwise raise your premiums and affect your ability to get coverage in the future.
As you can see, there is a lot to consider when renting a car. If you have questions about your personal or commercial insurance, don’t be afraid to give us a call at Smith Insurance & Financial Services, we’d be glad to help.
