Do I Really Need Rental Car Insurance?

The answer to this question depends upon several factors. These factors include the level of your personal auto insurance policy, any credit card programs, supplemental insurance plans and your personal risk tolerance and ability to pay for any damages. We will go through each factor and any limitations.

Will my own car insurance policy cover rental car loss?

This depends upon the level of coverage that you currently have in place. You need to ensure that the coverage level for your policy is high enough to cover a total loss of the rental car in case of a major accident. If you are only covering yourself at the state minimum coverage level, then your coverage may not be enough to cover a total loss of a large to premium sized car. Depending upon the insurer and your state, your policy may only cover rental car losses incurred while you are using it during the repair of your primary vehicle. You are also responsible for any deductibles. Depending upon your rental agreement, one other liability that 99% of policies will NOT cover is loss of use incurred by the rental car company. While the car is being repaired, they are losing rental income (loss of use) which may add up to a significant sum if the car is out for weeks. You may be responsible for reimbursing the rental car company for this loss.

Any losses not covered by your insurance policy will be your responsibility and any claims may increase your rates or make you a high risk or uninsurable. If you use the rental car company insurance, then any claims will not affect your primary insurance rates.

I don't have to worry because I have coverage through my credit card

This is one of the most misunderstood beliefs among those who rely on their credit card for default rental car insurance protection. Most don't realize the limitations or exclusions on this coverage. First of all, you must use this card for all of the rental car expenses or you will not be covered. In many cases, you will only be covered for your deductible after your primary insurance coverage pays the claim. You also may not be reimbursed until AFTER you have already submitted the repair bills and paid for the repairs up front. Many cards do not cover rentals above a certain class and/or timeframe. Longer period rentals (week or more) and higher class vehicles (SUV's, Premium cars) may not be covered. Many cards also charge a fee for rental coverage that may be more expensive in the long run depending upon how often you rent. You also will not be covered for any liability claims although your main car insurance liability should cover you depending upon your level of coverage.

Do I have any supplemental insurance plans ?

You may be covered by additional liability insurance such as personal liability or umbrella insurance coverage. Typically , these plans cover up to $1 million in third party liability claims. These policies are secondary coverage's that may fill any coverage gaps that your standard auto insurance policy won't cover minus any deductibles from your primary policy. If you have this coverage , then buying rental insurance may not be necessary. Check with your liability or umbrella insurance company to ensure that you are covered.

So, what's the bottom line ?

If you have enough coverage via your standard insurance, additional liability coverage and have the financial ability to cover your deductible and any loss of use liability, then you may be OK with not getting rental insurance coverage when you rent your car. This all depends upon your financial condition and ability to pay.

If you can answer yes to any of the questions below, then you may want to add some level of full rental insurance coverage or a damage waiver:

Where can I find the best deal on car insurance?

If you would like to see if you can save money compared to your current policy ,then we suggest that you compare policies and rates from several insurers. We recommend Insureme who allows you to compare several rates from dozens of major, highly rated insurers such as Met Life, Allstate, AIG, and more. They are also unique in that they include independent insurance agent quotes as well.

This should not be considered financial advice which can only be given by a qualified financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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