Rental Car Insurance: To Buy or Not to Buy

Have you rented a car lately? If you have, you were probably offered additional rental insurance when you did. You were told it only costs a few extra dollars per day, it brings peace of mind, and it covers you financially if something happens. But is it actually necessary, or are you just throwing your money away? The answer, of course, depends.

Types of Rental Car Insurance

Before you can determine whether it is a good idea to spend the money on additional insurance, you ought to know something about the insurance usually offered by car rental companies. Although each company may have slightly different policies, the most commonly available ones include liability, personal effects coverage, and personal accident insurance as well as a collision (or loss) damage waiver. A waiver is not exactly insurance, but it can help protect you from out-of-pocket expenses.

• Liability insurance helps to cover the expenses relating to damage to another person's personal property or the cost of providing medical services to another person you injure in an accident.
• Personal effects coverage may provide money to help pay for personal items stolen from your rental car.
• Personal accident insurance covers the medical bills for someone inside your car who was injured during an accident.
• Collision/loss damage waivers are perhaps the most confusing option. These waivers will prevent the rental car company from charging you for repair costs or loss of revenue caused by a lengthy repair.

So, Do I Need to Buy Additional Rental Car Insurance or Not?

Now that you know a little something about rental car insurance, we need to determine if it is worth the added expense. To answer that question, you need to check out your car insurance policy, as it may already cover you for most of the same situations as the car rental company's insurance policy.

An excellent example of this is liability insurance. Most drivers with decent insurance policies will not need to purchase additional liability insurance for their rental car since their own policy covers any car they drive. When it comes to buying additional collision coverage, you can give it a pass as long as you have it as part of your existing insurance policy. Of course, if you are worried about your insurance company raising your rates due to a claim, you may still want to opt for it.

That pretty much covers the cost of damage to other people's property, but what about an injury to people in your own car or the theft of your personal property?

Some drivers may already have personal injury protection or medical payment coverage as part of their existing policy. If this is the case for you, then you don't need to consider paying for personal accident insurance from the rental company. However, drivers who don't have this type of coverage or adequate health insurance may want to pay for it.

As for theft of your personal property, some renters or homeowners policies provide partial compensation when a thief steals "off-premise" items. If your policy doesn't include "off-premise" items, or if you want more coverage than your policy offers, the rental company's insurance may be a good buy for you.

Are you still thinking you may need to buy more insurance for your rental car? Then it is time to give your credit card company a call. Most credit cards provide additional car rental insurance as one of their benefits as long as you use it to pay for the full cost of renting the vehicle and you adhere to the company's regulations. A representative from your credit card company can give you all the details.

Whether you are renting a car for business or pleasure, make sure your rental car company isn't taking you for a ride.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.