September 24, 2009

Rental Car Insurance – Necessity or Waste?

On a recent trip I stood patiently at the rental car window waiting for my turn to secure my luxury compact for my week long trip. When the representative placed the paperwork before me to sign she smiled and pointed to the dreaded rental car insurance box.

Now comes the conundrum. Should I bypass the extra auto insurance coverage altogether or are the risks of getting in a fender bender in a strange city great enough to warrant overpriced coverage? Depending on the rental car company, the cost of extra insurance can range anywhere from $10 a day to a whopping $40. Possibly more as this has been just my personal experience. And rental companies often offer additional coverage to negate any deductible which could be charged.

The truth of the matter is if you have an auto insurance policy, or even if you paid with a credit card (pretty much a requirement with rental companies) you are probably covered anyway. To be on the safe side you will want to check with both your car insurance company and your credit card company before making the reservation. Otherwise, there is a chance you could be driving around uninsured and taking an unnecessary risk.

So what do you do if you’re not already covered? Unfortunately you’ll have to take the hit. And chances are it will cost you. Most car rental companies offer a number of insurance options, each with its own advantages and disadvantages.
* Collision Damage Waiver – This protection is used to shift the accident liability from the driver of the vehicle in question to the insurance company and covers not only damages but also the loss of use of the vehicle. Unfortunately, the Collision Damage Waiver can be voided if you are found to be at fault.

* Personal Accident Insurance – Costing between $1 and $5 per day, personal accident insurance covers the medical bills for you and your passengers in the event of an accident.

* Liability Insurance – Like traditional liability insurance, this protection covers damage to the other vehicle but also covers the rental vehicle up to $1 million. A liability insurance plan generally costs between $7 and $14 per day.

* Personal Effects – Usually costing an extra $1 to $4 per day, personal effects insurance covers any personal items in the vehicle that are stolen or damaged in an accident.

But the question remained as I stared at the box. Is it worth it? Like most of us, I have a full coverage policy that includes rental insurance and a home policy which offers coverage while I am away to cover my personal effects. Therefore, I declined the costly additional coverage. And my advice to anyone else is to investigate their own policies before spending the extra money to see if you are already covered as well.