When is Rental Car Insurance a Good Idea?

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Any one who has ever rented a car has faced the dilemma of paying for or declining the company’s over-priced rental car insurance. Going with the coverage will add from $15 to $30 to the price of the car, which many safe drivers see as a ridiculous expenditure. As with most things insurance-related, however, going in having done your homework is the best strategy.

  • Does your existing automotive insurance have a provision for limited coverage of a rental car? If so, what benefits are included? Very few people can answer that question, but it’s worth your time to find out.
  • Does your credit card company offer a limited amount of secondary coverage for a rental car? Even fewer people know the answer to that question.

Together, these two coverage benefits may be sufficient for very short-term car rentals with a predicable degree of driving involved. If, however, you are faced with keeping the rental car for a longer period of time, for instance in the wake of an accident while your car is being repaired, there are other factors to consider.

  • If you are involved in an accident in the rental car, you may not just be paying for damages, but for company levied fees. These are likely buried in the language of the rental contract. Ask about additional fees in the event of an accident before you sign the rental contract and don’t sign until you get an answer.
  • The rental coverage in your existing policy likely has a low limit on the amount of benefits it will pay. The longer you drive a rental car, the greater the chances of an accident. If the cap is not sufficient to cover the expenses of an accident, you need the rental coverage.
  • If your existing automotive insurance premiums are high and if you file a claim for an accident while driving a rental car, the cost of your regular insurance will go up even more. Is that a chance you can afford to take?
  • What is the rental company’s policy about damage payments in the event of an accident? If they require immediate payment, can you afford to shell out the money while sorting out the matter with your own insurance company? If not, go with their insurance.

On any level, insurance is a game of assessing risk. There are circumstances under which rental car insurance is a good idea, but these must be weighed against your existing insurance coverage and the length of time you expect to be driving the rental. If your car will only be in the shop for a day and you’re driving to work and home again on a familiar route, chances are you can skip the coverage. If, however, your car is headed to the body shop and you’ll be in the rental car for two weeks, go with the extra coverage. Even at $30 a day ($420 over a two-week rental), the cost is less expensive than paying for the consequences of a major accident.