This is a tricky rhetorical question, because any insurance agent can tell you that every company has different language in their policies. On top of that, different states have different requirements for the insurance company and/or rental company to provide certain coverages. So to answer this rhetorical question you ask each time you travel and rent a car, I will give a response regarding the average situation.
These are the different options to buy car rental insurance:
Bundled in Vacation Package
(And of course) Direct from the Rental Company
Because I’m an insurance agent, I will talk about the first option: Personal Insurance.
However, I will state one thing about buying directly from the car rental company. It’s costly, but it offers clear peace of mind with no out-of-pocket expense as far as insurance. You’ll see why below.
Did you know that your personal insurance policy usually covers a rental car at no extra cost?
Let’s look at these terms closely:
Liability – Liability is bodily injury/property damage you do to someone/something that is covered by your personal insurance policy.
So, if you have liability coverage in your personal auto policy, that also covers you for any rental cars. Also, states require rental companies to cover you for at least the state minimum within that state. However, you should know this coverage can be low, so don’t depend on this. For example, in Florida the minimum state coverage is $10,000 per person and $20,000 per accident for bodily injury (in other words, harm you would do to someone else).
Full coverage – Full coverage means you have:
1. collision coverage so that if you’re at fault for wrecking your car, your insurance company will fix your vehicle and
2. comprehensive coverage which is any other damage caused to your vehicle such as, theft, flood, hitting a deer, etc.)
In order to extend the full coverage to a rental car, you will need to have full coverage on your personal vehicles. You then would pay the same deductible on the rental car as you would on you car. Note that if you are driving across state lines, the state insurance laws of the state you are currently in are the ones that apply.
So, do I really need to buy rental insurance?
Below are a few coverages your personal policy does not cover and it could cost you big-time!
Loss of use – Loss of use means the amount of rental revenue that the car rental company would make if the car was in proper order. If you damage the car, and it is your fault, your personal policy does not cover the amount of money forgone during the time the vehicle is being fixed or unusable because it can’t be rented. Guess who pays for that cost? You. 99% of all insurance companies exclude this coverage, and the cost is billed to your credit card. However, the rental companies’ insurance will cover this.
Loss of depreciation/value – When you damage a car, the value of the vehicle depreciates in value. This can add up hugely. Once again 99% of companies specifically exclude this, but the rental companies’ insurance will cover this. Be sure to ask the rental agent which level of their insurance covers this.
Example: You rent a car valued at $20,000. After the damaged vehicle is fixed, it has a new value of $15,000. The rental car company can charge you for that loss of value.
So ask yourself again. “Do I really need to buy car rental insurance?”
“Yes!” I think it would behoove you to buy rental coverage. You’ll have complete peace of mind, and your personal policy will just be extra coverage, like the cherry on top.
“No.” If you understand the terms of your coverage, then you can calculate your comfort zone. But keep in mind, there are things that could happen that may not be covered.
Always clarify your coverage with your agent or insurance company before you rent.
About Ryan Ruffcorn
Ryan grew up in Keokuk, graduated from Keokuk Senior High, and started his agency in Keokuk from scratch in 2003 after having worked for one of the largest international accounting firms, KPMG, LLP.
Ryan is hardworking; his loyal and trustworthy character is exemplified by the way he does business. He thoroughly enjoys helping clients through the insurance buying process to secure coverage for their most valuable assets.