Do I Need to Purchase Insurance for my Rental Car?

You’re finally getting out and enjoying the freedom of vacation and exploring new places or returning to some old favorites! Renting a car allows you to go where you want when you want. But are you taking unnecessary risks if you don’t purchase extra coverage for a rental car? Or are you throwing money away if you do?

Like many things, the answer depends on your circumstances and how much risk you are willing to assume. 

If you are risk-averse, you may want to purchase a collision damage waiver (CDW) from your car rental company. The great thing about a CDW is that “no matter how banged up the car could be, you’re off the hook. Just turn it in and be on your way” (SmarterTravel.com). Unfortunately, CDW can be quite expensive--typically starting at $30 per day or significantly higher; the cost of this coverage may be similar to what you are paying for renting the car (SmarterTravel.com). 

For anyone who is not inclined to spend quite so freely, you may be pleased to know that if you already have car insurance, your coverage extends to the rental car and maintains the same coverage limits and deductibles if your trip is for personal travel within the United States (MarketWatch.com). However, you must have commercial coverage if your trip is for business. Rental car coverage for personal travel to Mexico or Canada may or may not be covered by your existing policy, so it’s a good idea to contact your agent before heading out on your trip (MarketWatch.com). If your trip is overseas, you will likely need to purchase rental car insurance, as U.S. companies typically don't provide coverage there.

Another avenue of protection is your credit card. Most cards, when used to pay for your car rental, will provide collision coverage. The coverage is secondary, which means it will only take care of what your own insurance does not pay first, and you will receive it as a reimbursement after you have paid the rental company upfront (SmarterTravel). Unfortunately, there may also be the challenge of rental companies not always sharing proper documentation with credit card issuers (SmarterTravel).

One more option you may want to consider is the collision coverage offered by third-party insurance companies that may be available if you rent your car through one of the bigger online travel agencies such as Priceline or Expedia (SmarterTravel). Collision coverage purchased this way typically costs around $10 per day--much less than the rental company’s CDW. However, if you make a claim, you will likely have to pay upfront and be reimbursed later (SmarterTravel). 

One more reassuring travel-related fact is that if you are the victim of theft, your homeowners' or renters' insurance policy will cover your possessions (Nerdwallet.com). Your deductible will still apply, and to make a claim, you will need to file a police report (Nerdwallet.com).

At Waitte’s Insurance Agency, we want you to have a safe, enjoyable vacation wherever you go and however you travel. Give us a call when you are ready to discuss your unique insurance needs. 

MarketWatch.com
Nerdwallet.com
SmarterTravel.com