It is the age-old debate: do you really need to purchase car rental insurance?
Many people, unsure about whether their car insurance will cover rental cars, also purchase rental car insurance. However, this may result in duplicate coverage and a waste of money.
The problem lies with the fact that many people simply don’t know the extent of their auto insurance coverage. In fact, a current study by the National Association of Insurance Commissioners found that nearly 42 percent of motorists were confused about the extent of their auto insurance coverage when renting a car. Another 24 percent of people who own credit cards were unsure of the rental car coverage through their credit card.
The best rule of thumb when renting a car is to research your current coverage (if any) that exists either with your auto insurance or with your credit card. Ask about the extent of the coverage when talking with your insurance agent or credit card company and ask about any limitations. Keep in mind that benefits vary greatly from one credit card and insurance company to the next, so never assume that because you have a similar credit card that the coverage will be the same.
The two most important factors to consider when talking of rental car insurance is liability and a collision damage waiver. If you don’t have this coverage, either through your credit card or insurance company, then it is usually best to purchase rental car insurance.
Collision Damage Waiver
The collision damage waiver, sometimes referred to as a loss damage waiver, covers your rental car expenses in the event of theft or damage. It is important to understand that many times your auto insurance will be the primary insurance in the event of an accident, with the credit card being the secondary coverage. In other words, a collision damage waiver through your credit card company will supplement your primary auto insurance, in most cases.
There is an exception to this, provided you take out the extra insurance through your credit card. Premium Car Rental Protection from American Express, for example, provides primary coverage for cardholders, thereby protecting their auto insurance policy from increased premiums in the event of an accident.
