5 Ways to Know Which Insurance to Take on a Rental Car

Insurance is one of those buzz words that makes it so hard to resist. Do you want insurance on that? Are you insured? The word itself conjures up images of all the worst things that can happen. Of course, that’s exactly what helps sell insurance—that fear of the worst case scenario—but having insurance at the right time can be critical. So, when is that right time?

What You Need to Know About Rental Car Insurance

When it comes to rental car insurance, it’s a tricky situation. Here are five things that you need to know about car insurance to make sure you take the right one.

What does your personal car insurance cover? Be sure that you know what your own personal car insurance covers. Most private auto insurers will cover you even in a rental car, as long as you are the renter and the person operating the vehicle. Knowing the limitations of your car insurance can help you decide which insurance to take out on your rental. For example, if you’re covered for the collision but not theft, take out theft insurance on your rental car.

Who will be driving the car? If other people will be driving your car whom are not listed on your private car insurance policy, any damages they cause to themselves, the rental car, property, and others will not be covered. If additional drivers are going to be driving the rental car, you will probably want to take out insurance on them.

Supplemental coverage. When your private policy provides you with only minimum coverage, you should figure out the value of expected loss—yes, we understand how that sounds—or damage to the rental car and figure out if you need supplemental insurance. Basically, supplemental insurance will help you cover anything that your private insurance doesn’t cover and is typically cheaper than full insurance on a rental car. Also, it’s important to find out from your insurance company the exact details of your policy and how it works with rental cars. For instance, some collision coverage that is extended to rental cars only provides you with coverage equal to your own car’s value. This means that if the rental car is worth more than your car, you probably will want to take out some supplemental insurance to avoid incurring responsibility for any damage that might occur.

Credit card companies can provide insurance. Some credit card companies will provide rental car insurance if you use their card when you’re paying for the rental. Typically, this means that you will put up the money for the insurance, then notify the credit card company within a set time limit (generally 30 to 45 days) and then the credit card company will reimburse you for the insurance costs. If your credit card offers this, you should really take advantage of whatever coverage is covered by the company. Keep in mind that there will be certain measures you have to take such as declining the rental company’s collision waiver and being the primary car rental signer. Contact your credit card company for more information on these requirements and your reimbursement and insurance policy. If you frequently rent cars, consider switching to a credit card company that provides their customers with this perk.

What are you using the car for? Finally, it’s important to understand how your private car insurance policy treats different situations. For example, on business trips, some car rentals are not insured. On the other hand, if you’re on vacation, the coverage will apply. Other situations where this gets tricky include being in a foreign country where insurance won’t transfer over to rental cars, renting cars for long periods of time where coverage might be limited (typically up to a month) or renting exotic cars, pickups, and campers. You should always check with your auto insurer to find out any types of restrictions that may apply beforehand to avoid miscommunications that prove costly.

Choosing the Right Insurance

If none of the above situations apply to you, it’s probably a good idea to take out an insurance agreement on the rental car with the car rental company. Driving without car rental insurance is not only risky, it can be downright costly and even deadly in certain situations. A little insurance goes a long way to eat the costs and pay the small daily amount for the bare essentials such as collision and bodily damage. The last thing you want is for your vacation to be spoiled or even worse, your life. Not only could you wind up injured and in the hospital with mounting bills, but you could also wind up with thousands of property damage or liens placed on your person for bodily injury to others.