Do You Need Rental Car Insurance
If your vacation is
going to include a rental car, then your insurance agent, not your
travel agent, should be the first call on your list. That's because
insurance carrier, credit card companies, and car rental agencies are
competing for your insurance dollars – and more importantly, what they
offer you today might be different from what they'll be offering you
next week.
In the end, it's up to you to make sure that you're
covered. So plan ahead. If you have auto insurance, call your agent and
find out what kind of coverage you have. Most auto policies extend to
rental cars. Ask specifically about two things: collision damage waiver
and liability. Collision damage waiver, or CDW, covers any damage to
the car you are driving. Liability covers damage you do to someone else.
Don't Forget to Check Your Existing Auto Insurance Policy:
Review your auto insurance policy or call your insurance agent before
you rent a car. You don't want to pay extra money for coverage you
already have.
Most auto insurance policies will provide
liability insurance if you injure someone in an accident. However,
damages to the rental car are only covered under your policy's
comprehensive and collision coverage. Make sure your auto policy
includes this type of coverage.
Then Be Sure to Check Your Credit Cards:
In some cases, your credit card will pay for damages to a rental car in
the event of an accident. To be eligible, you probably would have to
decline the collision damage waiver as well as charge the full amount
of the rental car on your card. Make sure your credit card offers these
services. Also make sure you understand all limitations and exclusions
your credit card may issue such as limited rental contracts and
approved rental dealers.
You can safely decline the collision
damage waiver if you're absolutely sure your auto insurance or credit
card applies. However, buying the collision damage waiver could be the
answer for some travelers.
Here are the reasons why: If you
aren't covered under your own insurance or credit card then you may
consider purchasing the collision damage waiver. It's a better option
to pay about $8 to $11 a day than $15,000 to $20,000 to replace the
rental car.
The collision damage waiver pays for "loss of
use". This is what the rental car company charges you for the money and
time it lost since the vehicle could not be rented. Most states do not
cover loss of use under an auto insurance policy. The exceptions are:
Alaska, Connecticut, Louisiana, Minnesota, North Dakota, New York,
Rhode Island and Texas.
If you are involved in an accident,
some rental car companies want payment upfront, meaning you'll have to
wait to be reimbursed from your own insurance company. This is an
expensive price to pay for some travelers; therefore some may just opt
to pay the extra price for the collision damage waiver.