When presented with the option of purchasing rental car insurance, you probably have several questions. What does it cover? Do you really need it? Is it worth the cost? There are arguments both for and against rental car insurance, which can make the decision difficult to make. Continue reading to learn some of the pros and cons of rental car insurance and decide whether this type of coverage is right for you.
Pro: It absolves you of responsibility for damages
The coverage offered by rental car companies is not insurance, but rather a contract called a loss damage waiver. It is an agreement that the rental company will waive its right to pursue you for compensation of damages to the vehicle. It is not insurance and will not pay your medical bills or cover your liability to anyone other than the rental car company. However, it could save you thousands if the vehicle you rent is damaged, stolen, or destroyed due to a covered event.
Con: It may come with exclusions.
Unfortunately, there are exclusions in many loss damage waivers that might void the agreement. Carelessness, for example, might be grounds to seek compensation even if you have purchased the rental car coverage. That means you would not have to pay for the repair of your rental car if you cause a collision, that is, unless, issues like excess speed or alcohol were factors in the collision. Likewise, you might not be responsible for replacing a stolen rental car unless you left the engine running unattended. Be sure to understand all of the fine print in the waiver before purchasing it.
Pro: It doesn’t require a deductible.
Rental car coverage is protection offered by the rental car company – not an insurance company. Unlike the collision and comprehensive coverage on your personal policy, this type of protection generally does not require hundreds of dollars in shared responsibility from the driver.
Con: It can be expensive.
Peace of mind can be costly. If your rental car costs $25 per day, you might be surprised if the rental car company wants to charge you and additional $10 per day for a loss damage waiver. Over the course a few days, this might not seem like much to pay for convenience and financial security. However, it can actually raise the price of renting a car by 40 percent or more depending on the cost of coverage and the price of your rental.
Pro: It simplifies your coverage.
Using the loss damage waiver offered by the rental car company can save you the frustration of waiting for claims to be settled by third-party coverage. Not to mention, rental car agreements typically state that the loss value of the vehicle is determined by the rental car company – not the actual cash value. Using third-party coverage could put you in the crossfire of a loss value dispute, whereas the collision damage waiver typically covers the rental company’s entire loss regardless of how much it is.
Con: You may already be covered.
Ultimately, you still may not want to pay for rental car insurance if you are already covered against damages. If you have collision and comprehensive coverage on your personal insurance, for example, it will probably transfer to cover your rental car while you drive it. However, they may not cover the lost rental income while the rental car is being repaired and the insured may be responsible for those charges.
In addition, many credit card companies offer rental car damage protection that can help subsidize your deductible if you need to file a claim against your primary car insurance coverage.
The decision to purchase a loss damage waiver from the rental car company is one that should be made based on your individual situation and circumstances. In many, if not most cases, we recommend opting for the coverage. Feel free to contact Philleo Agency Insurance if you have questions about your personal coverage and whether rental car insurance could be right for you.