Are you headed for vacation or is your car in the shop for repairs? Either way a rental car is a great alternative for short term use when you can't drive your own vehicle. Rental cars need to be insured because you are liable while it is in your possession. So the short answer to the question, do I need car rental insurance, is yes a rental car always needs to be insured. As for if you need to purchase the insurance directly from the rental company that will take a little more explanation.
Car rental insurance can be obtained thru several different avenues. Know what is available and what is covered so you can make an educated decision when it comes to car rental insurance. Buying car rental insurance directly from the car rental company is optional.Sources of Car Rental Insurance
- Direct from Rental Company
- Personal Car Insurance
- Credit Card
- Bundled in a Vacation Package
Direct from the rental company is a great option if you can afford it. The rental company offers multiple levels of coverage that protects you and the rental car bumper to bumper. The downfall really comes down to the price tag. However, the price comes with knowing you will not have any out of pocket expense beyond the cost of insurance.
Personal car insurance usually extends to cover a rental car with no extra cost. You will need to have full coverage listed on one of your personal vehicles in order to have the full coverage extend to a rental car. The deductibles on your car insurance will apply to the rental car. If you are traveling across state lines in a rental, the state insurance laws of the state you are driving in apply.
Many times car insurance does not cover all the fees that may come with an accident in a rental car. The car rental company typically charges rent for the days the rental car is in the shop for repairs. So if the rental is undriveable for two weeks, it can add up to a hefty sum of money that you are responsible for. In some states your car insurance will cover the fees so you will need to check with your insurance carrier.
Major credit card companies almost all offer coverage for a rental car. Check with your credit card to verify the coverage. The number one requirement is you have to purchase your rental car using the credit card you want the coverage extended from.
When using your credit card to cover a rental car you are also looking at possible fees if you are in an accident. Similar to when your car insurance extends to a rental car, the rental company may charge you rent for the days the vehicle is repaired. Sometimes if you can prove the rental company didn't lose money due to the undriveable car you can get out of the fees. Getting proof usually requires accessing the rental company's logs and a lot of times they do not allow access.
Bundled in a vacation package is a viable option especially if you are traveling outside the U.S. With a bundled price you may see a better price rather than going directly through the rental company. Check to see what fees you might still be responsible for if an accident does occur.
Be aware of the pitfalls of not purchasing the car rental coverage directly from the rental company. Use the money you save from not purchasing the car rental coverage as a buffer for possible fees if you are in an accident. Car rental insurance only comes into play if the rental car is damaged. Before renting a car, evaluate your potential for a loss. Are you going to be visiting an unfamiliar or high traffic area? Or are you just driving back and forth to work while your vehicle is in the shop?
By not purchasing the car rental insurance through the rental company, you may be taking a possible gamble depending on the fine print regarding fees. Ask your car insurance provider or credit card company about coverage limitations. Plan ahead for possible fees and purchase the insurance directly from the car rental company if the possible fees would devastate your finances. More often than not you will not have damage to your rental car and can save some cash by opting out of additional coverage. But be sure to have your car insurance or credit card to fall back on.