When you rent a car, and especially if you do if frequently, it's easy to say no to the additional coverage that the rental car company offers. The few extra dollars each day can seem more like a last-ditch effort to get a few more bucks from you. If you think your insurance company will cover everything the rental car coverage will you may want to take a look at a few of these facts.
What the Rental Car Company Sells May Not Be Insurance
Although the coverage rental car companies offer may sound like insurance, it might not technically be insurance. In some states it's an agreement between you and the rental car company that says that you won't be held liable if there are damages made to the vehicle by you. It's called a collision damage waiver. You can't go out and do whatever you want to the vehicle, but it will protect you if you're involved in an accident.

If you do get into an accident with a rental car, it may cover things like the cost of the repairs, the cost of not being able to rent out the car, theft of the vehicle and other liabilities. When you're offered the collision damage waiver, ask questions about what scenarios it covers and what dollar amount it will cover up to.

The Difference Between Your Car and the Rental Car
Depending on your plan, your insurance company will most likely cover you when you're driving a rented vehicle. But the extent of the coverage may be different than when you're driving your own vehicle.

For example, let's say your insurance company covers rental car damage if you get into an accident. They may pay for all of the damages to the vehicle, but you may be responsible for the loss the company is taking for not being able to rent out the damaged car. You may be personally responsible for those costs if your insurance company doesn't cover them.

In the event of an accident, your insurance company may not cover the car with the same deductible as your own car. You may have to pay a higher deductible before they start paying their share. Keep in mind, your rates may go up if you get in an accident with the rental car using your insurance plan. But if you opt for the collision damage waiver, your insurance company may not have to make any payments and in return your rates may not increase.

How to Get Additional Coverage Without Rental Car Insurance
If you're looking for more coverage than your insurance company offers, but don't want to pay for the rental car company's plan, renting the car with your credit card may come in handy.

Some credit card companies have supplemental rental car insurance coverage built into the policy. They may make up the difference, or some of it, in the event your insurance company doesn't pay for all of the bills. Each policy is different so you'll have to find out if and what your credit card covers.

The Bottom Line
If you're traveling in a foreign country, you may not have the option of not purchasing the additional coverage. Some countries like Australia and Ireland require that you purchase the coverage. Other countries may also require you to pay for theft insurance as well.

Before you travel, find out what your insurance company covers so you can determine if the cost of the collision damage waiver is worth it. Ask your policyholder detailed questions about how you will be covered in a rental car accident and what you may be responsible for. A five minute phone call might save you a lot of money in the end.

Related Articles
  1. Credit & Loans

    Credit Card Review: Citi Diamond Preferred

    Read about Citi's Diamond Preferred credit card, a low APR offering with excellent balance transfer benefits and a long-term low introductory rate.
  2. Budgeting

    Just the Right Book Review: Is It Worth It?

    Take an in-depth look at Just the Right Book, a subscription service that delivers personalized book selections based on your reading history and preferences.
  3. Entrepreneurship

    ‘Happy Birthday to You’ Belongs to Everyone Now

    A class action lawsuit over the copyright to the iconic American song “Happy Birthday to You” ends by placing the ubiquitous ditty in the public domain.
  4. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  5. Budgeting

    The Honest Company Bundles Review: Are They Worth It?

    Learn more about The Honest Company and its bundle subscription services, which deliver discounted diapers, formula and other baby products to your doorstep.
  6. Budgeting

    Blue Apron Review: Is It Worth It?

    Read about one of the top meal-kit delivery services in the United States, and learn more about what it offers and how much it costs.
  7. Home & Auto

    Don't Be the Victim of Auto Loan Rip-Offs

    Subprime auto loans – and 60-day delinquencies – are up. These 4 signs of predatory auto loans can tip you off before you're caught in one.
  8. Stock Analysis

    JCPenney's Path To Profitability (JCP)

    Learn about what J.C. Penney's management team has been doing to profitably grow its business as the company recovers from years of revenue declines.
  9. Insurance

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  10. Home & Auto

    The Latest Airbag Recalls: What to Do

    The latest warnings are from Honda/Acura and Dodge. How to look up your car – and what to do if you find it on the recall list.
RELATED FAQS
  1. How does a cost-of-living adjustment (COLA) affect my salary?

    Some companies build salary adjustments into their compensation structures to offset the effects of inflation on their employees. ... Read Full Answer >>
  2. Where can you buy NetSpend reload packs?

    You can only purchase NetSpend reload packs at Giant Eagle, Albertsons, Roundy's and Pathmark supermarkets. NetSpend cards ... Read Full Answer >>
  3. Can your life insurance company sue you?

    A life insurance company generally cannot sue you, but it can sue your estate. The company may do this in order to recover ... Read Full Answer >>
  4. How can insurance companies find out about DUIs and DWIs?

    An insurance company can find out about driving under the influence (DUI) or driving while intoxicated (DWI) charges against ... Read Full Answer >>
  5. Can your insurance company cancel your policy without notice?

    In most states, an insurance company must give a policyholder written notice of at least 30 days before canceling a policy. ... Read Full Answer >>
  6. Does your car insurance company report accidents to the DMV?

    Your car insurance company does not generally report accidents to the Department of Motor Vehicles (DMV). However, depending ... Read Full Answer >>
Trading Center