Do I need insurance for a rental car?

Do I need rental car insurance?

 You’ve probably been at the rental-car counter, listening to the rep ask if you want to purchase their insurance for the rental car.  The thoughts start racing through your head, “Is this a rip-off? Doesn’t my regular auto policy cover me?  What about my credit card?  Why didn’t I figure this out before I left on my trip?

At the Insurance Center of Milwaukee, we are here to help.  Every situation is not the same, but we’ve got some general tips that will help you make an informed decision the next time you’re standing at that counter.

1. Know your personal auto policy.  Insurance policies vary, so it’s a good idea to give us a call — before you rent a car — to make sure you have the coverage you need.  In many instances, your personal auto policy coverage will carry-over to your rental car — but that coverage may be limited, particularly if you don’t have comprehensive and collision coverage on your current policy.   Of course, if you don’t have a personal auto policy, you’ll need to purchase coverage from the rental company.

Keep in mind that in the event of an accident, many rental companies will charge fees beyond repair costs. They may assess a loss-of-use fee for each day the car is unusable, as well as charge for the decreased value of the car due to the accident.  Not all insurance policies cover these fees.

2. Check your credit card protection.  Most credit cards provide some coverage, but often payment is limited to reimbursement of your car insurance deductible (after that policy pays for repairs). Generally, loss-of-use and other fees are not covered, but it’s important to check with your credit card provider to determine their policies.  And while some cards may offer additional protection for a fee, usually coverage is limited to damage to the car, not liability for any injuries to others.  Remember, to receive any sort of benefit from your card, you must use that card to pay for your entire car rental.

3. Consider any unique circumstances.  Are you renting a car in a foreign country, or for a long period of time?  You’ll definitely want to get confirmation of coverage from both your insurance carrier and credit card company because different rules might apply.  No matter where you are, vehicles such as trucks, RVs or exotic sports cars often aren’t covered under standard policies.  If the car is being used for business purposes, your personal coverage might not apply either. Finally, if multiple people will be driving the car during your trip, make sure your coverage will apply to them as well.

4. Learn about the insurance offered by the rental car company.  According to the Insurance Information Institute, rental companies offer four main types of coverage:

a) A Loss Damage Waiver (LDW) relieves you of responsibility if your rental car is damaged or stolen. This may also provide coverage for loss of use.

b) Liability Protection provides protection from lawsuits if you are sued after an accident.

c) Personal Accident Insurance covers you and passengers for medical bills after an accident. You may not need this if you have adequate health and auto coverage.

d) Personal Effects Coverage protects you if items are stolen from the car.  You generally are covered for this under your homeowners or renters policy, but keep in mind that the loss must exceed your deductible for you to receive payment and certain items may be excluded from those policies.  Particularly if you have a high deductible, it may make sense to purchase this coverage from the rental company.

When you go on vacation, you don’t want to stress out about insurance.  Give us a call before you leave!  Then, when you head over to the rental-car counter, you don’t have to worry about your coverage — and you can start enjoying your trip!