When your car is in the shop, or you are traveling out of town, a rental car can provide an affordable solution to your temporary transportation needs. Of course, driving a rental means taking financial responsibility for someone else’s car. Just like your own vehicle, you will need insurance that covers you against the cost of any potential loss or damages. Today, we are discussing three common sources of coverage and some of the pros and cons for each one.
Collision Damage Waiver
The collision damage waiver is often referred to as “rental car insurance” since it is offered by the rental car company. Technically, this waiver is more of a contractual agreement rather than an insurance policy since it is a confirmation that the rental car company will not pursue you for covered damages or losses to the vehicle you borrow.
Pros: This type of protection offers peace of mind knowing that without a doubt, you are covered for qualified events. It may also help to know that you would not be on the hook for any portion of the loss – not even a deductible.
Cons: Collision damage waivers can contain many different exclusions not typically found in traditional auto insurance policies. For example, your coverage might be voided if the rental car company determines that carelessness led to the damages or vehicle loss. Furthermore, collision damage waivers can be very expensive. At the average rate of $10 to $15 per day, it can easily raise the cost of renting a vehicle by as much as 60 percent or more.
Personal Auto Insurance
Your personal auto insurance policy will probably transfer coverage to your rental car so long as you have both collision and comprehensive coverage. These two types of coverage pay for damages or losses caused by nearly any event, from inclement weather and fires to theft and collisions.
Pros: You probably already have this coverage available to you at no extra cost. That can help keep the cost of renting a vehicle in check without increasing your financial risk. Not to mention, personal auto insurance tends to cover much more than the collision damage waiver.
Cons: On the other hand, filing a claim against your personal auto insurance will probably require you to pay a deductible, which could cost hundreds of dollars. In addition, the claim could affect your ability to qualify for future coverage, or it could result in an increase in your rates.
Credit Card Companies
Before you reserve and pay for your rental car, make sure to do so using a credit card instead of a check, debit card, or cash. Credit card companies typically offer some degree of rental car coverage to card users, although it can vary between issuers.
Pros: Many credit cards automatically come with this coverage, and there is no need to ask for it before using it. It is offered as a completely free benefit to you as a cardholder.
Cons: Credit card companies may require that you file a claim against your personal insurance before utilizing your credit card rental car coverage. Since your primary auto insurance is likely to pay for most of the damages, you might have to rely on your credit card issuer for help with the deductible only.
The Bottom Line
Ultimately, it is up to you to decide which type of coverage you want when driving a rental vehicle. Give us a call to find out if you are already covered and whether taking additional protection from the rental car company could be right for you.