What You Need to Know About Car Rental Insurance

When we go to rent a car we are presented with a multitude of options for car rental insurance in order to safeguard our trip.  Make sure when you arrive at the car rental company that you are well informed with exactly what you need.  Otherwise you will likely be duplicating the coverage that you already have and wasting a lot of money.

The best thing to do before your trip is to make two phone calls. 

• First is to your car insurance company.  A driver’s insurance policy often includes insurance against theft or damages to a rental car.  Find out what kind of coverage you have.

• Second, call your credit card company.  The credit card business is very competitive and these days many different credit cards (especially gold and platinum cards) offer fairly extensive car rental insurance.  Their plans can sometimes change though, so a quick phone call will get you the information needed.

Often with these two phone calls, you will realize that you don’t have to purchase any extra car rental insurance as you will already be fully covered.  However if you are not fully covered, car rental companies are required to offer by law:

• The collision damage waiver, also known as optional vehicle protection or loss damage waiver, can cost as much as $19 per day. This is not technically an insurance product, but instead shifts liability for collision damage from the person renting the car to the car rental company. This also covers for "loss of use," or time a damaged car can't be rented because it is being repaired. Waivers, however, can become void if the accident was caused by driving illegally or on unpaved roads.

• Liability insurance, which provides protection for up to $1 million, costs between $7 and $14 a day. A driver would already have this coverage under their own car insurance.

• Personal accident insurance covers medical and ambulance bills for the driver and passengers in the event of an accident. Opting for this would cost an additional $1 to $5 daily, but health insurance or personal injury protection under auto insurance would already pay for those types of bills.

• Personal effects coverage is not always included in regular insurance plans. This protects against theft of items in the vehicle, such as laptops, golf clubs or cash. The coverage generally costs between $1 and $4 a day. It may be more cost effective, however, to purchase a floating policy under home or renters insurance, so that valuable items are fully protected at home as well as on vacation.

The best advice is to plan ahead.  The last thing you want is to feel pressured at the car rental counter to spend a lot of extra unnecessary money because you are not sure what you already have and what you need.