Rental Car Insurance

Summer is coming and if you’re thinking about renting a car for vacation, you will be asking the age old question – “Should I purchase the car insurance from the rental agency?” The answer is – IT DEPENDS. If you do your homework before you get to the rental counter you can save yourself a lot of money. It really won’t take much time because while you’re shopping for a good deal on a rental you can also be checking out the insurance situation.

Actually your first call for renting a car will not be to the rental agency but to your own insurance agency. You need to find out what the extent of your auto insurance coverage is. Most auto insurance policies will extend to rental cars but insurance experts recommend inquiring about two things – collision damage waiver and liability. Also if you’re letting your teenager do some of the driving of the rental car, ask your agent and the rental agency about coverage.
Collision damage waiver, or CDW (as it often appears on rental contracts) covers any damage to the car you are driving and liability covers damage you do to someone else. You need to ask your agent if there is a limit on your collision insurance. If you regularly drive an older car but rent a brand new luxury car (remember sometimes if a car is available you can upgraded to one of these types of cars for free), make sure your personal insurance policy will cover the whole cost of replacing the more expensive auto. If your policy doesn’t cover replacement cost and your car is worth $2,000 and you total a rental worth $20,000, you are on the hook for $18,000.

Frequently, consumers who drive older cars don’t carry collision at all. If this is your situation, you need to buy a policy at the rental counter or use a credit card that will give you this coverage. Consumer advocates recommend if you rent cars often you might get an estimate from your agent on a policy to cover you as it might be cheaper.

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