Should Drivers Purchase Rental Auto Insurance?
Additional Car Insurance for a Rental is Probably Not Necessary
Apr 1, 2009
One of the most common decisions drivers face when renting a car is whether to accept the rental car company’s offer for additional auto insurance coverage. In most cases, auto insurance is extended to rental cars for those who are already covered under their own auto insurance. Thus, accepting additional auto insurance coverage while in the rental car office may be adding an unnecessary expense.
Auto Insurance: What Car Rental Companies Offer Separately
When renting a car, the car rental company will generally offer the driver several choices in additional auto insurance that is actually quite similar to a typical auto insurance policy. Offerings include
- Liability Auto Insurance: as in a typical auto insurance policy, liability auto insurance covers the driver financially in the case that he or she strikes another car and causes property damage and/or personal injury.
- Loss Damage Waiver: although not auto insurance per se, the loss damage waiver (LDW) allows car renters to waive any financial responsibility for damage to the rental car or if the rental car is stolen. The LDW may also cover associated fees including towing, labor, and loss of use while the rental car is in the shop.
- Personal Effects Coverage: protects the driver and passengers financially in the case of theft of personal items, e.g., electronics, luggage, and clothing.
- Accident Coverage: protects the driver and passengers financially in the event of an auto accident that requires medical attention.
The most important auto insurance coverages that car rental companies offer is liability and the loss damage waiver. However, car renters can decline these additional coverages in most circumstances. But what exactly are the circumstances in which the driver can opt to decline additional car rental coverage?
Auto Insurance: When Should the Driver Decline Additional Car Rental Coverage?
Often times drivers will make a quick decision in the car rental office because they aren’t aware of their current auto insurance coverages or whether they extend to rental cars. The driver should decline any additional car rental coverage until he or she calls the auto insurance and determines car rental coverage.
- Per Loss Damage Waiver: if the driver is already covered under comprehensive and collision under his or her auto insurance, this additional car rental coverage should be declined. However, to be financially protected the driver needs to have both collision and comprehensive, not simply one or the other.
- Per liability coverage: those who are not covered under auto insurance should consider purchasing the additional rental car loss damage waiver and liability coverage. However, the person also has the option of purchasing what is called a non-owner auto liability insurance policy. Drivers who are fully covered for liability on their auto insurance should decline this additional car rental coverage.
- Per personal effects coverage: drivers who are covered under comprehensive auto insurance or have a homeowners insurance policy that includes theft coverage when away from home should decline this coverage.
- Per accident coverage: if the driver is covered under personal injury protection (PIP) on his or her auto insurance and is also covered under a personal health insurance policy, separate rental car accident coverage should be declined.
Auto Insurance: The Bottom Line on Additional Car Rental Coverage
Most drivers who are already covered under full auto insurance (i.e., collision, comprehensive, liability, personal injury protection) are probably wasting money if they accept additional auto insurance in the car rental office. However, drivers should always check with their auto insurance company first before renting the car to make sure the auto insurance extends to rental cars. Drivers also have the option of calling their credit card company to see if it offers auto insurance coverage for rental cars.
See related articles, "Understanding Auto Insurance Liability,” "The Basics of Auto Insurance," and "The Hidden Benefits of Auto Insurance."
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