A common question I often hear as a Personal Insurance Specialist is whether to purchase insurance when renting a vehicle. For a variety of reasons, my answer is consistently “yes”—it’s worth it to buy rental car insurance. Whether you’re renting for a few hours or a few weeks, rental car insurance can save you from unexpected costs if you’re in an accident, as your personal insurance likely won’t cover everything and any claims would impact your personal insurance record.
Key Tips to Consider When Renting a Car
Know Before You Go
Each rental car company has its own policies and waivers. Before booking, take the time to research the daily coverage costs and what’s specifically covered under the agency’s insurance policy. Resources like the Denver Post’s comparison of rental car policies can be a helpful starting point.
Read the Fine Print
Rental car agreements often contain details on potential costs you may face if you’re in an accident and haven’t purchased their insurance. Look out for these common clauses:
- Loss of Use of Rental Vehicle: If the rental car is out of service for repairs, the rental company may charge you a daily fee for each day they lose revenue from that vehicle.
- Diminished Value of the Rental Car: After an accident, the rental company might claim the vehicle is worth less than it was pre-accident. If using personal insurance, you may be liable for the difference between the Actual Car Value (ACV) and the pre-accident value they believe it was worth.
Be Aware of Fees
This goes hand-in-hand with reading the fine print. Standard personal auto insurance often doesn’t cover various fees, such as administrative fees, towing, storage, and vehicle appraisal after an accident.
Review Your Personal Insurance Policy
If you opt to rely solely on personal insurance, be aware that your comprehensive and collision coverage may transfer to the rental car, but many personal umbrella policies exclude rental car collisions. Additionally, choosing rental car insurance from the rental agency can keep an accident off your personal insurance record, preventing potential rate increases that can last for years.
Consider International Rentals
Some personal auto policies may not provide coverage abroad. When traveling internationally, we strongly recommend purchasing rental car coverage from the rental agency, as you’ll be subject to the laws of that country.
The High Cost of Skipping Rental Car Insurance
If you’re involved in an accident with a rental car and chose not to buy the rental agency’s insurance, you could face substantial out-of-pocket costs. With around 6 million car accidents in the U.S. per year, the chance of even a minor incident is high. By purchasing rental car insurance, you can avoid the financial strain of extra fees and costs buried in the fine print.
For questions about personal auto insurance or rental car insurance, please contact PSA, or reach out to cbullock@psafinancial.com.
