By EMMET PIERCE
Before you buy rental car insurance, it's best to make sure you truly need the coverage so you can avoid making unnecessary purchases.
Many consumers want the peace of mind of knowing they're covered for all emergencies, says Nicole Farr, communications manager at the Arizona Insurance Institute. If you feel pressured to make a decision at the rental-car checkout counter, saying "yes" to additional protection may seem like the safest decision.
However, if you buy insurance that merely duplicates protections already in your personal auto policy, your money will be wasted. Here's what to consider before getting to the checkout counter.
What does rental car coverage typically cover?
Rental-car policies generally offer the following coverages, according to Mike Barry, a spokesman for the Insurance Information Institute (III).
- Loss damage waiver: This relieves renters of any responsibility if their rental car is damaged or stolen. It typically also provides coverage for "loss of use" if the rental car company charges you for the time a damaged vehicle is in the repair shop, says Michael Thrasher, an analyst for ValuePenguin, an insurance industry research firm. A damage waiver also may cover towing charges. The waiver may be declared void, however, if an accident results from speeding, driving while intoxicated or driving on unpaved roads. This waiver can cost $10 to $20 per day, according to the National Association of Insurance Commissioners (NAIC).
- Liability insurance: Rental companies typically also offer an option for the minimum liability insurance required by state law. This covers injuries and property damage that a driver may cause to others. It also may pay for the driver's legal defense. It can cost $7 to $14 a day, according to the NAIC. If you have liability insurance for your own car, you probably don't need this, says Amy Bach, executive director of the United Policyholders consumer group in California.
- Personal accident insurance: This covers rental car drivers and their passengers for medical and ambulance costs, says Barry. Health insurance or personal injury protection (PIP) through your own car insurance typically covers such expenses, often making this coverage unnecessary. The NAIC says this can cost $1 to $5 a day.
- Personal effects coverage: This provides insurance protection for the items taken from rental cars. The III says renters generally don't need this if they have homeowners or renters insurance policies. This coverage can cost $2 to $5 per day, according to the NAIC.
The III says that if you have collision and comprehensive coverage on your personal auto policy, you likely don't need this coverage. Collision covers damage to your car that occurs as a result of a collision with another vehicle or object, while comprehensive provides coverage against theft, vandalism, fire and damage from collisions with animals.
Barry says that all states except New Hampshire require car owners to carry bodily injury liability, which pays for costs associated with injuries or death that you or other drivers cause while driving your car, and property damage liability, which reimburses others for property damage you may cause.
In total, if you were to purchase all of the rental car coverages mentioned above, it could cost you between $20 and $44 per day.
How can consumers know what coverage to buy at the rental car counter?
Before you say "no" to rental agency insurance, make sure you're adequately covered, advises Bach. You must know exactly what your existing auto insurance and/or credit card covers in order to identify any gaps in coverage and choose an appropriate amount of supplemental coverage, if necessary, from a rental car company.
"It has to be an educated decision," she says.
According to the III, the auto insurance coverages you've purchased for your own car usually apply when you rent a vehicle, as long as you're not using the rental for business purposes. If you already have liability, comprehensive and collision coverage, buying more protection from a rental agency usually isn't necessary, says Bach.
In addition, if you plan to use a credit card that provides auto insurance coverage when you use it to pay for a rental vehicle, additional coverage may be unnecessary.
According to the New York Times, the auto insurance coverage offered through credit cards may take effect when the coverage from your own auto policy is exhausted, or it may be your first line of defense when you file a claim. To find out which is the case, call the number on the back of the credit card you plan to use.
Why should consumers consider purchasing rental car insurance?
While rental car insurance often isn't necessary, it can provide you with peace of mind, says Jim Armitage, an insurance agent in Arcadia, California. Drivers who buy loss damage waivers don't have to worry about charges rental companies often impose for dings and paint damage or the loss of use after they've been damaged.
A rental damage waiver typically shifts liability for collision damage from the person renting the car to the car-rental company, according to the International Risk Management Institute. That means there's no need to file a claim through your personal auto policy or credit card company. This may prevent your rates from increasing following an accident because you don't file a claim, says Barry.
If you already have an auto insurance policy or receive rental-car coverage through a credit card, you may not need to buy insurance at a rental car agency. However, it's best to check your coverages with your insurer and credit card company so you can make an informed decision. Also, consider whether the comfort you gain from buying an extra layer of coverage is worth the added cost.
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