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.