Should I purchase insurance on my rental car?
This is a question we get all the time. Usually our insurance clients will call us while at the rental car agency asking us if they need to take out the extra insurance coverage that the rental car agency is trying to shove down their throat. They want a quick, easy answer- “do I need to purchase insurance for my rental car?”. The answer is: it depends!
There are a number of factors that need to be considered when determining if you need to purchase the rental car agency’s insurance coverage or if your normal insurance policy will cover you. Your first step should be to call your insurance agent BEFORE you get to the rental car agency, not while you are there.
Here are a few things to consider:
Generally, your liability limits that you carry on your personal insurance would transfer over to a rental car. So if you have liability limits of $100,000/$300,000/$100,000 on your personal insurance policy then those limits would most likely transfer over to the rental car.
Your physical damage coverage is generally transferred over to a rental car as well. So if you have comprehensive and collision coverage with $1,000 deductibles then that coverage would most likely transfer to the rental car.
A key point to note is that we are talking about personal rental cars here, not commercial vehicles. Things like renting a Uhaul or any other large, commercial vehicle would not be covered under your personal auto insurance policy.
There are two more points that need to be considered-
-Even if you have great coverage on your personal auto policy, there are a few things that wont be covered on the rental car. One of those things is “loss of use”. Consider this example- You rent a car, you elect not to purchase the rental car agency’s insurance coverage because you have “full coverage” on your personal insurance policy. You are in an accident and it’s your fault. There is damage to the rental vehicle. Let’s say the rental car has to go in the shop for 10 days to be fixed. During these 10 days the rental car agency will not be able to rent our the car, they’ll be losing money! Instead of losing money they’ll actually just pass that expense onto you; and that’s something that your personal insurance policy will NOT cover.
-Let’s say you elect to purchase the rental car agency’s insurance coverage. Let’s say you are in a covered accident. With their coverage you essentially “walk away” and their policy takes care of everything. You don’t have to worry about your personal insurance policy going up at renewal, because the claim won’t be filed under your policy. You wont be haunted by the claim that will follow you around and elevate your rates for the next 5 years. That’s a very nice benefit.
So, what’s our recommendation?
Having been in the insurance industry for 15 years and seeing numerous scenarios and claims involving rental cars, our recommendation is YES, you should buy the rental car agency’s insurance policy. The ability to spend an extra few bucks a day and buy that extra peace of mind is well worth it, in our opinion. Most rental car agencies policies offer $1 million in third party liability coverage and also offer a collision damage waiver which essentially allows you to walk away from any damage you cause to the rental vehicle. For the small price they’ll charge you for this coverage, we say to go ahead and purchase it.
Quick Tip– most sales people at the rental car counter make a commission by selling you the insurance policy. This means they have a little wiggle room in the pricing. Negotiate with them! Usually you can have great success in lowering the initial price they offer you.
*As always, please note that each policy and each state is different. Please check your specific policy for exact coverage information.