Straight answers to the nagging questions about Rental Car Insurance
You’ve just started your vacation. You’ve arrived at your destination by plane, collected your luggage, and are in the process of renting a car. You’ve given the person behind the counter your driver’s license and credit card, and now you are being asked if you want to buy “coverage” from the rental car company.
Do you need it?
Possibly not, but how can you be sure? The best way is to be prepared and know the answer to this question before you leave on your vacation.
Why shouldn’t you buy insurance from a rental car company? The person behind the counter is (usually) not a licensed insurance professional. He or she is not conversant with insurance laws and won’t know whether or not your personal auto policy covers you when you rent a vehicle (in most circumstances, it does).
Some rental car company personnel may say you are required to by the coverage (not true) or you will be personally liable for any damage to the car while you’re renting it (most likely, not true).
This Coverage Is Incredibly Expensive
* Fact. While it’s true you could be making a costly mistake if you need the rental car coverage and don’t buy it, you’re also making a costly mistake if you buy it when you don’t need it.
Rental car insurance is incredibly expensive. On a daily basis, which is how it is sold, the rental car coverage can cost 10 to 20 times more than your personal auto policy. If you buy all the protection offered by the rental car companies, you could easily double the daily cost of your rental vehicle.
So who needs to buy the rental car coverage?Well, here’s who doesn’t. If you have insurance for your own cars, including collision and comprehensive coverages, you don’t need the rental car insurance – provided you are not renting the vehicle for business purposes.
If You Have NY Auto Insurance, You Can Save Money!
If you’re on vacation and you have the appropriate auto insurance back home, no problem. Just say no. With New York liability protection, you will also be covered as long as you are traveling anywhere in the U.S. or its possessions. If you’re on vacation but planning to do some business, you’re probably OK, too. But you should talk to your auto insurance agent if you mix business and pleasure on the trips where you plan to rent a car.
What if You Don’t Have Your Own Insurance?
So what happens if you don’t have a car back home to insure, or you haven’t properly insured your cars? This can cause you plenty of trouble simply driving here in New York, but it could be an even bigger problem if you’re driving somewhere else.
* Note. If you don’t have your own personal auto policy, you won’t be covered for damages to the rental car if it is in an accident, stolen, vandalized, collides with an animal or burns.
So what should you do?
In this case, we recommend that you buy the rental car company’s insurance. However, as mentioned above, it can be quite costly. That’s why it is always better if you have your own insurance at home before you leave for your trip. * Tip. You may also benefit from buying buy the rental company’s Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW). Some rental car companies offer some options with their CDWs or LDWs. Some come with deductibles, like regular collision and comprehensive coverages, while others provide first-dollar coverage.
First-dollar coverage comes at a higher price and some options limit the coverage. In other words, after a certain amount of damage to the vehicle, say $5,000, you would be responsible for paying the remaining damage costs.
What if You Damage Another Vehicle When You’re Renting a Car?
What about damage or injuries you cause to other vehicles and people while you’re driving the rental car? Once again, if your personal auto policy includes liability insurance as required in New York, your policy will pay for any damage or injuries you cause to other cars or people. If you don’t have liability coverage (if you don’t have a car, you’re probably not going to carry auto insurance) you actually may not need to buy the rental car company’s liability policy, either.
Most states require rental car companies to provide some liability coverage to you at no charge. The limit of the free liability coverage is equal to the state’s minimum liability limits.
Is this enough? Probably not, and certainly not if you cause a serious accident.
The minimum liability limit requirements are often no more than $15,000 for injuries to any one person, no more than $30,000 for injuries to all persons, and no more than $5,000 for damage to the vehicle(s)(s) you hit. That’s not much at all.
* Tip. If you have any assets to protect, but no liability coverage of your own, you should strongly consider purchasing the rental car company’s liability coverage, which costs $7 to $15 a day depending on the state and level of coverage you choose. Higher liability limits mean higher daily costs.
If you have any concerns about whether you need to buy the protection offered by rental car companies, you should talk to your auto insurance agent. Rental car insurance can double your daily rate. That’s a lot to pay for something you don’t need.