Rental Car Insurance – Should You Buy It? | Leavitt Group News & Publications

You ’ ra standing at the counterpunch of a rental car means in a strange city. The agent asks if you want to purchase policy. on the spur of the moment you ’ re at a crucial decision point. If you agree, you pay a little more ( or even a bunch more ) for your lease. If you refuse, you ’ ll be required to check some chilling boxes and initial some lines and drive away wondering what will happen if you get in an accident .

“Should I buy insurance coverage when I rent a car?”

This is a coarse interview we receive from our clients. The answer is “ It depends. ”

  • First, it depends on what type and amount of insurance you have on your personal vehicle(s).
  • Second, it depends on the vehicle you own and drive.
  • Third, it depends on whether you are willing to make claims on your personal insurance, paying deductibles and accepting possible rate increases if you have an accident in a rental car.

The Easy Answers

hera are three situations where we recommend you purchase extra policy at the car rental counter :

  • If you don’t own a personal vehicle and don’t have personal auto insurance, you should buy coverage when you rent a car.
  • If you don’t have collision coverage on your personal vehicle and you don’t want to buy Enterprise or Avis a brand-new car, you should purchase the add-on insurance coverage.
  • If you’re renting an exotic vehicle (such as a Ferrari, Lamborghini, or Bentley), the rental company will probably require you to buy special insurance coverage.

apart from these specific situations, the answer is distillery “ It depends. ”

Types of Risks, Types of Coverage

There are four types of insurance typically offered when you rent a fomite :

  • Collision Damage Waiver (CDW)
  • Supplemental Liability Protection (SLP)
  • Personal Accident Insurance (PAI)
  • Personal Effects Coverage (PEC)

Let ’ s consider each of these and see how they relate to the coverage most people carry on their personal vehicles .

Collision Damage Waiver (CDW)

This indemnity covers the cost to repair or replace the rental car if it is damaged or stolen. The fomite must have been driven by an authorize driver named on the rental agreement, and the price can ’ deoxythymidine monophosphate be the result of recklessness or negligence. Without this coverage, any damages will be your responsibility—or the responsibility of your insurance company, based on your personal car policy. coverage for rental cars is subject to the same limits in your personal policy. That means if you have a collision in a rental cable car deserving $ 20,000, and your personal policy insures a vehicle worth $ 10,000, you ’ ll have to pay the difference out of your own pocket. In addition, any claims are submit to your deductible, so if you cause $ 400 worth of damage and your deductible is $ 500, you ’ ll be paying for those repairs yourself .

Supplemental Liability Protection (SLP)

Every state has a minimum level of indebtedness security every fomite owner must carry, and lease companies are no exception to this prerequisite. The department of state minimums don ’ deoxythymidine monophosphate provide adequate protection for anything more than a minor fender carouse. Supplemental liability protection ( SLP ) broadly provides $ 1 million in extra coverage to help fill the break between the lease agency coverage and the actual price caused in an accident. If your personal car policy is a “ state minimal ” policy, opting for the SLP is probably in your best matter to. even if your liability coverage is higher—say, $ 100,000 per person and $ 300,000 per incident—you could find yourself paying out of pocket if you are involved in a serious accident .

Personal Accident Insurance (PAI)

If you or your passengers are injured in an accident in a lease car, personal accident policy will pay medical and ambulance costs related to the accident. The policy may besides include a death profit for both driver and passengers if the worst should happen. Without this insurance, the price of medical care related to an accident would be your province ( in cases where you are held creditworthy for the accident ) or the province of the early driver if they are at fault. If you have no medical coverage at all, or if you have a “ high deductible ” design, you should consider opting for this low-cost coverage.

Personal Effects Coverage (PEC)

This accessory coverage helps replace your personal place if it is stolen from the lease cable car. The limits are broadly $ 500 per person with a maximum benefit of $ 1,500. As with most types of insurance, prevention can help you avoid problems. Don ’ thyroxine leave valuables in a lease cable car. If you purchase this policy, remember only $ 500/ $ 1,500 of your stuff is covered. Items stolen from any vehicle are covered by your homeowners or renters policy, though any claims would be topic to your deductible .

What Happens If You Are in an Accident?

A dear way to make the decisiveness about rental car indemnity is to consider what would happen if you were in an accident in the rental car with or without the coverage .

Scenario #1:  You back into a light post, causing $500 worth of damage to a rental car’s bumper.

If you purchased the collision price release, the rental agency would repair the vehicle at its own cost. If you didn ’ thymine purchase the collision price release, you ’ ll be responsible for paying the repairs out of pouch. You are besides likely to be charged for “ passing of practice, ” which is the lose rental income while the vehicle is being repaired .

Scenario #2:  You cause a significant accident, causing $5,000 in damage to the rental car, $5,000 to another driver’s vehicle, and injuries that require $15,000 in medical care.

If you purchased the collision damage release and supplementary liability protective covering, the rental car ship’s company will pay for repairs to both vehicles and cover the cost of the other party ’ s medical expenses. If you purchased personal accident insurance, the rental car caller will besides pay your checkup bills. If you did not purchase the lease indemnity, your personal insurance collision policy will cover damage to the rental car and your indebtedness coverage will pay for the damage to the other vehicle and the other party ’ s medical bills. You will be responsible for paying the deductible for the call, and for covering your own aesculapian costs. The rental cable car ship’s company will probable charge you for “ passing of use, ” which most personal policies don ’ deoxythymidine monophosphate cover. Your insurance premiums will likely go up because of the accident .

Credit Card Coverage

While many credit cards don ’ t provide any rental car coverage, some cards do provide a type of collision damage release protection for rentals. however, these cards do not provide any extra indebtedness coverage, thus damage to other vehicles and medical expenses would still have to be covered through a personal car policy or rental means liability coverage. If you ’ rhenium not indisputable whether your card provides rental car coverage, you can find out by reviewing the “ batting order benefits ” section of your tease issuer ’ s web site. Some cards limit coverage for vehicles rented less than 15 or 30 days, so pay up finical care to the terms before you rely on your credit tease company for auspices.

Making Your Decision

thus … you ’ ra stand at the counter of a rental car agency in a strange city. The agent asks if you want to purchase indemnity. Should you buy indemnity when you rent a car ? Consider the following factors:

  • What kind of vehicle are you renting? How does the value of the rental car compare to the value of your personal vehicle(s)?
  • How much liability coverage do you have with your personal auto policy? Do you have collision and comprehensive coverage? If so, what are the limits and deductibles? Do you have an umbrella policy?
  • How willing/able are you to pay to repair or replace a late-model rental car? Are you willing to pay for “loss of use” for a damaged rental vehicle?
  • How will a claim against your personal insurance affect your rates?

If you ’ re hush not indisputable, it ’ south time to sit down with your policy agent to review your car policy. together, you and your agent can determine whether you have the correct kind of coverage in the right amounts. That way, you ’ ll know everything you need to know to make the right decision when you ’ re at the rental counter .

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