Rental Car Insurance

Rental car insurance is not really insurance at all. Offered as an option when renting a car, it involves an agreement between a person and car rental agency to waive liability for damage to the car. Rental car insurance adds a small amount onto the daily price of a car; however, a decision to purchase must not wait until the moment comes to pick up the car.

What Exactly is Rental Car Insurance?

The most common type of rental car insurance is the collision damage waiver. This waives the customer of any responsibility for damage to the car and loss of use. Private auto policies do not always cover loss of use. In the event of an accident, cost to repair the vehicle is absorbed by the rental agency. A small deductible may apply depending upon the program chosen, but there are no other expenses for the driver.

Will Private Auto Insurance or Credit Cards Pay for an Accident?

Charging the rental fee to a credit card may extend protection from that credit card for damages. Specific coverage and limitations should be discussed with the credit card company prior to car rental.

Most auto insurance policies extend liability to a rental car. When involved in an accident, the primary auto insurance pays bodily injury and property damage liability; however, damage to the vehicle is only paid if comprehensive and collision are on the policy. As long as the policy includes these, private insurance pays for the rental vehicle and the insured pays their deductible. There is some risk of the insurance company placing a lower value on the car than the rental agency thereby forcing the customer to pay the difference. Because of this, rental car insurance may be the best money saving option. Just make sure you do your homework before renting the car in order to spend your money wisely.