A question often asked in our agency is whether or not to purchase rental car insurance. As agents, we like to determine risk, and try to find some clear cut solutions for our clients. With rental cars, there is no one size fits all answer. There is an ease and peace of mind by paying for rental car insurance. But, costs are often twice the regular rental rate. Let’s look at a few factors to consider before traveling.
Doesn’t my regular auto policy provide coverage for the rental car? Yes, under most circumstances. As long as you have full coverage on your policy, the same coverage will apply to the rental. If you have a liability only policy, then damages to the rental will not be covered. Similarly, your current comprehensive and collision policy deductibles will apply to any damage done to the rental car.
If I’m already covered, what potential pitfalls exist by not taking the rental car insurance?
1) Traveling away from home creates a larger than normal risk of an accident because of the unfamiliar surroundings. You will pay a deductible and add a claim to your record.
2) In Illinois, the “at fault” party’s insurance is responsible for damages. But, there are several “no fault” states where each party is responsible for repairing their own vehicle. This may leave your insurance paying for a claim you didn’t cause. The same thing would occur if struck by an uninsured vehicle in any state. Recent figures show 14% of all accidents are caused by uninsured motorists.
3) Using a credit card doesn’t always provide complete coverage. While some cards do provide rental car coverage, others do not, or don’t provide high levels of coverage under all circumstances. It is important to ask your credit card company what is available before choosing this option.
4) Diminution of Value and Loss of Use may apply. If you’re thinking “What is That?” at this point, you are not alone! Loss of use is the loss of rental income the car company would have received if their car wasn’t damaged. Diminution of value is the overall value to the rental car which has been lowered because of an accident. In both cases, you may be charged if you get into an accident in the rental car. In our office, some companies cover these two situations, and some do not. Please check with your agent to see if you are covered.
Making the Right Decision for Me
It is really up to each individual to determine if they want to pay extra for the rental car insurance. At Insurance Providers Group, we are always happy to visit about this type of situation, and please contact us further if you have questions. The pendulum sways from person 1) Who doesn’t take the rental insurance, has no accident, and saves some money on their trip…to person 2) Takes the rental insurance, and has an unfortunate accident. For a few extra dollars spent, person 2 can just set the keys on the rental company counter walk away! Neither is correct, or best, it just depends on your insurance company and individual preferences.
Hope this gives some insight into the process. Happy and safe travels, whenever they come along!