One of the questions that occasionally pops up on our radar is the subject whether or not to purchase auto insurance for rental cars. There are advantages and disadvantages for both options. Keep in mind, you are already covered for liability insurance under your personal auto insurance policy for any car you drive. The physical damage coverage (comprehensive and collision) are not covered under your personal auto policy.
Here are items to consider when it comes to rental cars.
Pro Insurance – Let’s say you are driving a rental car on vacation and you are involved in an accident in which you are responsible. Purchasing the insurance will place the financial burden of any liability on the rental car’s insurance company. Therefore if you are sued by the other driver you will not impact your own auto insurance. You will not have to worry about your own policy’s rates increasing or that chance that your policy will be canceled. You can most likely leave the rental car with the company at the end of the trip with no worries depending if you purchase the comprehensive and collision coverage.
Con insurance – The rates for insurance from the rental company are usually astronomical. You could be paying over $50 per day depending on the car you drive and the length of the rental. Renting several times per year can really add up after a while.
You’re accepting a risk in that a claim for car rentals under your auto insurance will happen if you file a claim with your insurance company. This could affect a rate increase and/or possible cancellation if you already have claims on your own policy.
Keep in mind that several credit card companies will cover your comprehensive and collision insurance if you use their card when you rent the car. Contact your credit card company to see if they offer car rental insurance.
Finally, your personal auto insurance policy usually only applies while you’re driving in the U.S. and Canada. You’re not afforded coverage if you’re driving in foreign countries. In this situation, you should definitely purchase the coverage offered by the companies of car rentals.