Car rental companies really want you to get car insurance from them. So much so that you might end up buying it unintentionally if you’re not careful.
Here’s what you need to know before you accept or decline a rental company’s insurance.
Do you need rental company insurance?
Car rental companies generally offer several coverage options, including:
- A loss damage waiver (sometimes called a collision damage waiver), which isn’t technically insurance, but does relieve you from responsibility if your rental is damaged or stolen. This can cost $10 to $40 a day.
- Personal accident insurance, which covers medical costs if you’re injured in an accident and provides a death benefit, and personal effects protection, which covers loss or damage to you and your passengers’ possessions in the car. These may be sold together or separately, and usually add up to $5 to $7 a day.
- Liability coverage with higher limits than what the rental company provides automatically (if any). This generally costs around $15 a day.
Keep in mind that if you already have car insurance, your coverage generally extends to a rental car you book for personal use. If your policy includes comprehensive and collision coverage, that also covers damage to or theft of the rental car— at least up to the value of your own vehicle.
If you have a high deductible on your own collision and comprehensive insurance, you might decide to buy the loss damage waiver. That way, you won’t have to pay your deductible if you crash.
Any liability or medical coverage in your auto policy, such as personal injury protection, also applies while you’re in a rental, and your health insurance could cover car accident injuries. Homeowners and renters insurance usually cover belongings damaged in or stolen from your rental car.
Many credit cards also provide rental car insurance, although the coverage might be limited to certain types of vehicles and rental periods, and be secondary personal auto insurance — meaning your auto insurance company pays first, and then the credit card benefit kicks in.
Note that rental reimbursement coverage, which you may have through your car insurance, is a different type of insurance. It pays for a rental car when yours is being repaired after a car accident or other damage claim.
How you could get car insurance unintentionally
Sometimes saying no isn’t enough to avoid charges for rental company extras. At least 100 customers of Dollar Rent a Car or its sister company Thrifty Car Rental (both now owned by Hertz) accused the companies of charging them for coverage that they’d verbally declined, according to a 2013 New York Times story. Reported victims include an insurance lawyer and a retired insurance adjuster who handled claims for a car rental company.
After customers said that they didn’t want to buy car insurance or a loss damage waiver, rental company agents included the coverage anyway, the Times report says. Customers then signed forms accepting the protection without noticing the discrepancy. Agents typically receive a commission for selling such insurance, the story says. Lawsuits against Dollar and Thrifty are pending.
What does this mean for you? Before renting a car, find out what coverage you already have from your personal auto and homeowners or renters policies, as well as your credit card. Then, if you decline rental car company coverage, make sure the form that you sign says so.
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