Hooray, it's vacation time! Time to get away and enjoy some well deserved downtime. You've made all of the arrangements - booked the flights and the hotel, reserved your rental car, arranged for a pet sitter - and now it's time to get out of town.
Off you go, getting to your destination was a breeze and now the last thing to do is sign the rental car paper work and then the rental car company hits you with the big question, "Are you going to buy the rental car insurance for a rediculiously expensive price (my words, not theirs) or risk your entire financial life (my words agani) by declining coverage?". Here's what you need to know about insurance to cover the rental car.
Does Your Car Insurance Extend To Rental Cars?
You'll need to check with your local, professional agent for answers specific to your policy, but in general, YES, your car insurance coverage will extend to a rental car. If you have good liability limits, comprehensive and collision on your policy than in most cases you will have the same coverage apply to a rental car that you are using for personal use. If you do NOT have comprehensive and collision on your auto insurance policy, you will NOT have it for the rental car either. So, full coverage on your car equals full coverage on the rental car.
What Is NOT Covered When Renting A Car?
Same disclaimer applies here, you'll need to check your specific policy but in general the loss of use is NOT covered by your personal insurance if you are in a rental car. Loss of use covers the amount of money the rental car company is losing by not being able to rent out a crashed car while it is being repaired or replaced. Here's an easy math example: You rent a car for $25 per day but crash it. It needs to be repaired for 10 days x $25 per day = $250 in loss of use. Your insurance policy will (most likely) not cover the $250 which means you will be responsible for paying it.
Is the loss of use coverage worth buying the rental car insurance? That depends on the math. If you are renting a car for 7 days and the insurance costs are an extra $22 per day that equals $152 in extra costs to cover the possible $250 in the example of 10 days of loss of use. However, if you're renting a car for 1 day, that's only $22 extra to cover the possible $250. Is it worth it? That is an answer you'll have to answer for yourself, but here's one more factor to consider; the rental car doesn't always charge for loss of use. If they have 10 more cars on the lot that could be rented instead of the one you crashed, do they suffer a loss of use? If they do not suffer a loss of use, will they try to recover the $250?
Two More BIG Considerations!
If you are a client of a company that offers some type of client reward for being claim free (like the 25% ANPAC refunds each year for being claim free*) you may want to consider paying for the rental car insurance so that any claim would be paid by the rental car insurance policy and NOT affect your reward. The chances of you crashing a rental car while on vacation are probably no greater than crashing your own car, but at least you would not lost your Cashback* reward if you are involved in an accident.
Most rental car insurance does NOT have a deductible. If you have a $1,000 deductible on your personal insurance policy, you would be responsible for the same $1,000 deductible if you crashed the rental car and your personal insurance was paying for the damages.
So, you've got some options when it comes to paying the extr costs associated with the rental car insurance. At least you know what you're facing the next time the rental car rep throws the paper work in front of you and stares at you intensely while you ponder whether or not the extra insurance is right for your personal situation.