Before You Decline That Rental Car Insurance ...

Before You Decline That Rental Car Insurance ...

One 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.

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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.

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