How to Insure a Rental Car

We all love the feeling of hitting the open road and heading to a vacation destination. With the wind in your hair and the sun at your back, you can feel invincible and ready to soak your cares away in a pool with a margarita. You think to yourself that you’re so happy you rented a convertible because it was the best way to start your trip and then bam! As you were lost in your margarita filled daydream, you accidently rear-ended someone before you could even get out of town. Your vacation can still happen without a hitch if your rental car is insured properly but hopefully you did your research first. There are several ways that you can insure your rental car and it’s best to know the basics of each. If you understand how they work, it can save you time and money.

Understanding Your Responsibility

Renting a car may seem exciting because you’re behind a brand new wheel you didn’t have to shell out thousands for but it’s very important to remember that you are still held responsible for your actions. Just because you don’t own the car doesn’t mean that you can throw common sense out the window. If you cause property damage or bodily injury while operation a rental car, you are responsible for any subsequent claims that result from the accident.

You are also responsible for all damage to a rental car, whether you cause it or not. If you run into a stop sign, you’re responsible. If a hail storm damages the roof and windshield, you’re responsible. If someone spray paints the rental car while you’re at dinner, you’re responsible. This may not seem fair but almost all rental car contracts place the entire responsibility in the driver’s hands. And, if the insurance company has to have the car repaired due to the extent of the damage, you can also be held responsible for any loss of revenue they experience for the car’s downtime. A dealership with a large inventory of cars will likely not do this to you but it’s an important fact to know.

Who Provides Rental Car Insurance

There are three main sources of rental car insurance that you need to consider: your personal auto insurance policy, the rental agency’s coverage, and your credit card’s coverage.

Insuring a Rental Car With Your Personal Policy

If you have an extensive personal auto policy, it can be a great option to insure your rental car. Just make sure that you understand your own policy and how that will cover the liability you assume when you rent a car. Personal coverage can be different person to person so if you aren’t quite sure what you have, be sure to check with your insurance company first. You will want to have collision coverage, which is going to cover any damage to a car you drive.

Your comprehensive insurance is going to cover any kind of damage that happens that wasn’t your fault. Your liability insurance will cover another person’s property damage and bodily injury if you cause the accident. If you decide to use this option, your rental car will be subject to the same policy limits and deductible amounts that your personal car uses. If your purchase insurance through the rental company on top of your of your personal policy, it’s likely that the rental car policy is going to be used first and then the damages can be claimed against your personal policy.

Insuring a Rental Car Through the Rental Agency

Rental agencies will offer several options if you decide to insure the car that way. The two main options are known as a loss damage waiver (LDW) and a collision damage waiver (CDW). These are similar to your personal auto policy’s collision and comprehensive services but can be fraught with stipulations. It’s best to read the fine print before you sign anything. Some LDW and CDW waivers will not cover an accident if they find there is another driver or you were speeding when you wrecked.

This means that the cost of the accident would be coming out of your pocket. This isn’t meant to scare you but you should know what you’re buying. If you already have coverage from your personal policy, it would be in your best interest to use that. Some people may not have full coverage and at that point, it’s best to invest in the rental car coverage. The Insurance Institute for Information (III) says that costs can vary per day, ranging from $9-$20. Compared to the amount of coverage you receive from your insurance company, this can seem expensive but it’s worth it to be covered.

Insuring a Rental Car Through Your Credit Card Company

Some credit cards will offer rental car coverage as long as you charge the entire amount of the car to your card. It may sound easy to kill two birds with one swipe of a thin, plastic stone but be aware. Your credit card’s coverage may not be as complete as you’d like. Many companies will have a large number of exclusions and it can be hard to find out what those are unless you have a copy of it right in front you.

The credit card coverage may cover damage to the rental car but exclude any other vehicles and some have limits while others don’t. Make sure your credit card will provide primary coverage despite what kind of personal auto policy you have. Some companies will void their services if they find out your personal coverage could insure a rental car. If you plan on using this option, do your research before you arrive at the counter. It could be a great way to utilize your car benefits but it could also get you in a lot of trouble if you aren’t sure what’s covered.

When you plan your next trip, be sure to include some time to research your different options for a rental car. Normally, if you have a good personal auto policy, that will be your best option but double check just in case. When you finally hit the road with the right amount of coverage, your mind will be free to relax.

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