Rental Car Insurance: Necessity Or Overkill?

Rental car insurance: do you want it or not? It’s a question that always gives us pause whenever we’re traveling and want to make sure we’re protected if anything happens. But it can also lift the cost of your trip by an uncomfortable amount. With gas prices hovering at or above $3 per gallon, you want to do all you can to control costs, and you don’t want to end up paying for something you may not need.

With that said, it leaves one to wonder: is purchasing car rental insurance a wise financial maneuver or complete overkill? As you’re about to see, it could be one or the other depending on your situation.

Your Risk Comfort Level

According to Jonathan Weinberg, founder and CEO of AutoSlash.com, the decision to purchase rental car insurance will largely depend on your risk comfort level.

“While the insurance offered by the car rental companies is generally the most expensive option, it also offers the most convenience and protection,” Weinberg explains. “If you purchase full coverage from the car rental company, you can walk away from an accident without having to incur any out of pocket costs.”

Weinberg also advises consideration of “whether you have a personal auto insurance policy, and if said policy covers you when renting a car — most do — and/or if your credit card covers you.”

Credit Card Coverage — What Most People Forget

This last point about credit card coverage is something you may find surprising, and it’s also a big reason why you should make contact with your company prior to making a decision.

“I thought I wasn’t covered as well, only to find out that I was,” said motorist James Shaffer. “Talk about a pleasant surprise!”

Chris Grammar, owner at Allied Brokers, Inc., a full-service insurance brokerage founded in 1954, calls rental car insurance “typically a waste of cash, as it is a duplicate coverage.”

“Your personal auto-insurance policy generally blankets damage to a rental car and your liability for the other car or individual you hit, when you drive in the US and Canada,” Grammar said. “You might need to pay the deductible for collision on your policy and the loss of rents throughout the repair. As a rule, these expenses are secured by your credit card. Most credit card companies provide domestic and worldwide coverage for damage to rental cars. However credit card coverage has numerous limitations.”

The Case For Car Rental Insurance

It’s because of these limitations you may wish to consider what Hertz Rental Car rep. Gulsah Boye had to say: “We recommend all renters to take advantage of the rental insurance as it can give you peace of mind. Loss Damage Waiver (LDW) is an optional service which, if accepted, eliminates your financial liability for loss or damage to the Hertz rental vehicle, its parts and accessories, provided the vehicle is used in accordance with the terms and conditions of the rental agreement.”

Boye continued: “You can pay only a few dollars more to insure your rental and that can give you peace of mind during any accident. You can walk away from your rental without paying a dime. People don’t realize how convenient it can be until they get into an accident and end up paying a lot to get the car fixed.”

Boye adds that some countries even require rental insurance, “Therefore before traveling to another country, if you are planning to use your credit card insurance, make sure to bring documentations with you and always check with your credit card company on the coverages ahead of time.”

In Summary

Depending on who you ask, car rental insurance is either a pointless duplicate coverage or a necessity for peace of mind. One thing is certain: whether you purchase the insurance or not, you shouldn’t make a decision before looking at what your existing policy and what your credit card will do for you. If you’re satisfied with the coverages, then you’ll likely be fine forgoing a purchase. But the real necessity is that you remain aware of the coverages you’re paying for ahead of time.

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