Should You Buy Insurance from a Rental Car Agency?

The answer is complicated. Aren’t they always? Rental car companies make a lot of money selling insurance to customers, and they can be aggressive in pushing it. The National Association of Insurance Commissioners says that more than a third of customers buy coverage from the rental companies.

It’s coverage that some critics insist is often unnecessary, because many rentals are covered either by the customer’s auto insurance policy and/or by the credit card used to secure the car. They are correct about that, of course, but it’s important to know some things before you decline the car rental company’s coverage.

Many auto insurance policies do cover rental cars, at least under some circumstances. That being said, many isn’t all. That means you’ll need to check with your insurance agent to make sure whether you’re covered when you get a rental car. For example, you might not have collision coverage, the type you’d most likely need if you have an accident that’s your fault. You’d have to pay to repair the damage to the vehicle in that instance.

Even if your policy includes your rental car and you have collision coverage, you might not have protection if you’re using the car for business. Some carriers limit coverage for long-term rentals, while others don’t offer transactions in foreign companies.

There’s another potential problem, too. It’s called your deductible – the amount you have to pay before your coverage kicks in. You’ll still be on the hook for that.

So what about credit card coverage? In many cases, it is secondary to your auto coverage, which means you must file with your carrier first. Some cards cover damage to the car you’re renting but do not have liability coverage that would help with medical, repair and other expenses related to the other car involved in an accident.

Here is one final warning about declining coverage. Car rental companies have begun charging fees for vehicles damaged by customers. One is a “loss of use” fee, which is it will charge for each day the auto is being repaired. Your provider and credit card company might not pay this fee, which means you could be responsible for it.

The bottom line: Consider this decision long before you step up to the rental car counter. Talk with your insurance agent about your policy – some providers offer riders that will extend you more protection. You also should ask your credit card company for the details of your coverage. In many cases, there’s no right answer to this question. But be sure you’re comfortable with the decision you make.

Source: AutoInsurance