September 4, 2011

3 Differences Between Personal And Car Rental Auto Insurance

Car rental agencies offer specialized car rental insurance to their customers, but on the surface, these policies can look like a bad deal. Car rental insurance costs about 10 times what personal auto insurance coverage costs–in some cases, it's as expensive as the actual daily car rental fee–and as a driver's personal policy usually covers rental vehicles, it can seem like a waste. However, car rental insurance is very different from personal insurance and can be well worth the expense in certain circumstances.

The biggest difference that car insurance rental companies will note is that car rental insurance covers just about anything that can happen to a vehicle. This includes costs that might not be covered under a standard personal auto insurance policy, including "loss of use" charges after a major accident that leaves a rental car seriously damaged. These are charges for the money that the rental agency would be making if their vehicle was in working condition. Loss of use fees can often be $30-40 or more per day, depending on the vehicle. There are also administrative fees which are poorly defined, but they're spelled out in car insurance rental contracts. Administrative fees can also be quite heavy. Repair and towing charges need to be paid right away, and while most drivers' personal auto insurance policies will cover at least the repair bills under comprehensive coverage, deductibles will be due immediately. Many car rental companies also offer supplemental liability coverage which complements a driver's personal auto insurance policy to further lower risks.

This is another difference between the two insurance types: car rental insurance usually has no deductible. In some cases there may be a deductible, but it's extremely low. This means very few out-of-pocket expenses after a major accident that destroys or damages a rental vehicle. An average personal auto insurance policy has a deductible of at least a few hundred dollars, so in a claim, the rental policy will be quite advantageous. There's also much less paperwork involved in a car rental insurance claim, mainly because the rental agency will be filing most of it. A driver will have to get information about a theft or accident and could certainly face liability claims from another driver involved in the accident.

A car rental policy can certainly be beneficial, but if a driver has a strong personal policy, it can also be a waste of money. Drivers should carefully consider their personal auto insurance coverage against the possible benefits of a rental car insurance policy before deciding whether an extra $20-30 per day is worth the extra peace of mind.