The Pros and Cons of Extra Insurance: Why Is It Necessary to Buy Rental Car Insurance?

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Renting a car can be a necessity or a luxury. Whether you plan a business trip, a vacation, or need a temporary vehicle to move around, it is a common practice for drivers to use rentals. The companies providing car rental services tend to offer rental insurance policies that are typically sold over the counter. However, an offer like this might cause a lot of confusion and many questions. Do you have to buy the policy? When renting a car, is insurance needed? How does rental car insurance work? And if you already have coverage, does it extend to rentals? In a nutshell, understanding your personal policy and various aspects of rental car policy is the key to making the right decision.

How Rental Car Policy Works

Car rental companies typically offer several insurance options that might or might not work well with your personal insurance coverage. However, you should bear in mind that personal coverage kicks in only if the rental is used for non-business purposes. When it comes to business-related use of rentals, the rules depend on the specific policy and the insurance company. Therefore, to ensure that you are fully informed on the matter, contact your agent or the insurance carrier.

Over-the-Counter Options vs. Personal Coverage

One of the insurance options offered by the car rental companies is called an LDW, also known as a loss-damage waiver. Its purpose is to cover the theft of the rental car or its damage. As a matter of fact, it is not a full-on insurance policy. Just as the name suggests, it is a waiver that guarantees that the rental company will not pursue you as an at-fault party.

In case you have a personal comprehensive or collision coverage, it typically extends to your rental. But it is crucial to remember the deductibles that come with any of these insurance policies. If you are uninsured, be prepared to pay for the damage out of your pocket. Since taking out insurance online requires no additional effort or time-consuming calls, you can use professional insurance comparison to choose your insurance type right. Besides, insurance coverage quotes are now available online. And this fact makes it fairly simple not only to identify the most suitable options fast but also to safeguard your personal or rental vehicle.

The other insurance policy available at the counter is called supplemental liability coverage. Its purpose is to cover the damage you might cause to other cars or property. It is a perfect choice for drivers who do not have auto insurance and do not own a vehicle. If you already have personal liability coverage, you should be aware that it typically extends to the rentals. In other words, you can rest assured that you are appropriately covered and opt-out of the over-the-counter offer.

What Else Is There?

If you assumed that there was another alternative option, you were right. Apart from all the insurance policies mentioned before, you can also use your credit card to get rental coverage. If the credit card is in your name, you used it to pay for the rental, and the company offers automatic insurance enrollment as a benefit, then you are all set. However, keep in mind that using this type of coverage requires declining over-the-counter offers. 

While it might seem like a perfect option, credit card coverage also has its peculiarities. Your credit card can offer primary or secondary car rental insurance. What is the difference between them? To begin with, most of the credit cards offer secondary coverage when it comes to rental cards. This coverage kicks in only after the primary policy the driver has covered its part. It means that all the car insurance claims have to be addressed to the insurance company first. And since this process is typically time-consuming, you will have to spend a lot of time waiting for the issues to be resolve and for money to be paid.

The primary coverage eliminates the need for any personal car insurance since it applies first. In other words, it is a handy option (if available) that guarantees that the claim is filed right away after you dial a number placed on the back of your credit card.

Should You Purchase Rental Car Insurance?

Naturally, there is no universal answer. And every driver should base his choice on the type of personal insurance policy, the purpose of renting a car, and benefits provided by over-the-counter offers or credit card policies. 

While it might make sense to a specific driver to purchase an LDW today, the same driver might make a different choice in a week. In a nutshell, it depends on a variety of individual factors. But one thing is certain: devote your time to reading a car rental insurance agreement carefully and follow the rules. Otherwise, you might end up paying out of your pocket for any violation or caused damage.

 


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