Before You Decline That Rental Car Insurance …

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do i need rental car insuranceOne of the most common cost-cutting tips you hear when you travel is to refuse the car rental insurance: You don’t need it!

But is that always true?

Not necessarily, The Wall Street Journal reports. Whether it makes sense for you to take the rental company’s coverage depends on what your existing coverage is—particularly when it comes to auto damage or personal liability.

You’ll want to examine four key areas before you waive that coverage, Loretta Worters, a spokeswoman for the Insurance Information Institute, told the Journal. That includes:

  • A loss-damage waiver: This is needed in the event the vehicle is damaged or stolen. This is not actually insurance, but paying for this means the rental company can’t make a claim against you. 
  • Liability insurance: This covers you in the case of a lawsuit.
  • Personal accident insurance: This provides coverage for the medical bills that may result if you or someone else in the car is injured.
  • Personal-effects coverage: This is insurance against theft of any belongings.

This may seem like a lot, but the good news is, even if you don’t currently carry your own car insurance, you might be covered through other channels. For example, some types of homeowners’ or renters’ insurance include coverage for your belongings, i.e., that “personal-effects coverage,” Insurancequotes.com Senior Analyst Laura Adams explained to the Journal. Or your credit card might even provide some basic liability protection for car rentals—but the amount of your coverage probably depends on your net worth.

Check to see what kind of coverage your credit card may already provide. If you have an auto policy, check with your provider first to find out what that coverage includes … but keep in mind that if you do make a claim through your regular insurance company on your rental, you’ll still pay your deductible and it could make your premium go up, just like it would in your own car. You could also opt for supplemental coverage, so that you’re not duplicating what you already have.

The bottom line? Do a little research to make sure you’re protected before you decline the extra fee—it’s better to err on the side of caution.

  • Dave

    How does one opt for the “supplemental coverage”you mentioned in the article?

  • SanLouisKid

    American Express offers rental car physical damage coverage of $100,000 for up to 42 consecutive days for a flat $24.95 per rental. Check the details before signing up. Once you’re enrolled, when you use your Amex card for a car rental, you’ll automatically be charged $24.95 and coverage will apply.

    This does not include liability insurance. Your own auto policy will apply. If you only have a company car (where the company provides coverage) or don’t have a car at all, you would need a named non-owner policy for coverage to extend to the rental. Or, the rental car company may have liability insurance available.

  • ksgirl73

    As someone who worked for a major rental company at one time I advise everyone to refuse the coverage. This is the rental car companies money maker and they will try to convince you that it’s needed and better than your coverage, but it’s not. I saw salesmen try to scare people into taking it out and it worked. If you already have good coverage through your own policy it will transfer to a rental. Save your money for your vacation instead of wasting it on something you are already paying for elsewhere.

  • CrankyFranky

    as an overseas visitor to the US I didn’t believe my home country car insurance would cover a US rental car, so I was careful to take our full-cover zero-excess CDW/LDW insurance, etc. – lucky as it took a phone call to Ireland to confirm this after coming back to the parked car on two separate occasions to find other cars had damaged it and left no thank-you note

    most recently I rented a car (in Oz) expecting the excess to be covered by my credit card $2250 excess insurance – to be horrified to be told – ‘our excess is $3300 and we charge it to your account for any damage – you can then seek any refund after we’ve had it repaired’ – after a tense standoff at the airport, I ended up ringing Ireland and adding on the extra cover to $65 – to be sure, to be sure …

  • Tricia Hein

    Because I am under my mom’s insurance, I always opt for the insurance. I figure, even if I don’t end up needing it, I don’t have to worry about scratches or dings. I don’t have a credit card other than my business credit card, so that won’t be any use. I figure the peace of mind is worth it for me.

  • Lara Rosenblum

    Personal accident insurance: This provides coverage for the medical bills that may result if you or someone else in the car is injured.
    Boy, did I learn this one the hard way. We rented a car once with our MasterCard and declined all the insurance (including this type) because we had collision protection on our MasterCard. Well, we got home safely and all was fine – but of course an hour before we returned the car, I slammed my finger in the door and tore my nailbed. It was incredibly painful and very dramatic, I dragged myself to the ER and had a subsequent visit 2 days later to check on the stitches, they took off my nail, etc. It was AWFUL but the most awful part was that when the hospital submitted all my claims to Blue Cross, they DECLINED the entire $3,500 bill because they said that in NY State, there is a clause that an auto insurance company is responsible for any medical injuries that you sustain while traveling in the rental, including this type of incidental personal injury. Sure, it wasn’t due to a car accident, but it involved the car. Because we didn’t have the personal accident insurance, we had to settle with the hospital (which was a grueling and expensive process), so I recommend that despite the misconceptions out there, everyone get personal accident insurance if you live in NY State.