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Vacation Rental Car Insurance: Should I Buy Coverage from the Rental Agency?

While renting a car in the United States or Canada, whether on vacation or for other purposes, it’s important to consider whether or not you need to buy the insurance offered to you by the car rental agency. Because it’s the law to drive an insured car, you won’t be able to drive off the lot without some sort of coverage in place. Most of us realize that we can purchase this insurance at the time we rent a car from the rental agency but do we have to buy their insurance? The short answer is, not necessarily. If you already have insurance on your own car you may not want to purchase the coverage, or maybe you will. It’s a matter of personal choice. With a little bit of knowledge in advance of renting the car, however, it may be possible to save money and avoid headaches later if there’s a claim.

One of the most obvious ways to make sure your rental car is insured is to purchase the liability and / or collision coverage offered at the time you rent the car from the rental agency. Purchasing this typically costs anywhere from $10 - $20 per day and is, arguably, the surest way to insure yourself, other people and the rental car. Purchasing insurance from the agency is especially important if you have low liability limits and / or no collision or comprehensive coverage on your own car. If your personal auto insurance liability limits are low, you’ll encounter the same problems in an accident with the rental car that you would if you have an accident in your personal car; your coverage’s could be insufficient, exposing yourself to having to self-insure and pay out of pocket or get sued for what your insurance won’t cover. If your personal car doesn’t carry comprehensive or collision coverage’s, the rental car won’t either unless you purchase this from the rental car agency or add them to your own car’s auto policy.

One of the benefits of purchasing insurance though the rental car agency is the peace of mind it offers for those who don’t want to deal with an insurance claim while they’re on vacation. When some drivers are on vacation, they prefer to not have the specter of an insurance claim looming over their heads while they’re trying to relax and have fun with friends and family. If they rent a car, they’ll purchase the agency’s insurance knowing that, if a pebble flies up and cracks the windshield while they’re driving, they can simply return the car to the rental car agency and walk away from it without having to deal with their insurance or credit card companies. Additionally, they won’t have to pay any sort of deductible because they’re not filing a claim on their own car’s insurance policy. This can be a relief to many while on vacation but, as previously mentioned, this will cost extra money and is most certainly a matter of personal preference.

Another option while renting a car is to allow the coverage’s from your personal car policy to extend to the rental. Most insurance policies will provide coverage for the rental but only up to the same limits and subject to the same deductible amounts that you’re currently carrying on your own car’s policy. This can save you money because you’re not paying for additional insurance that you already have. It’s important to reiterate, however, that if your auto policy has inferior liability limits, you’ll be on the hook to pay the difference if your coverage limits are surpassed. If there’s a collision or comprehensive claim, you’ll be responsible for the same deductible amounts that exist on your personal auto policy if you’re found to be responsible.

If your personal auto policy doesn’t have comprehensive and / or collision coverage’s, you should purchase these from the rental car agency. If there’s a claim, some credit card companies will reimburse you for certain deductibles if you pay for the rental car with that credit card. It’s important to check with your credit card company first before making any assumptions about this prior to renting the car. Another thing to consider, if you’re using your own car’s insurance to cover the rental, is that many insurance companies have a limit on the amount of days your insurance will extend to the rental. Quite often this limit is 14 days. If you’re renting a car for longer than that limit you’ll need to purchase additional insurance from the rental car agency or rent a different car after that time limit is reached.

Before renting a car, it’s prudent to have a conversation with your insurance agent or customer service representative. Make sure to find out if coverage’s will apply to rental car and for how long. Additionally, talk with your credit card company to find out what the credit card will and will not reimburse you for if you use it to rent the car. The key to saving money and avoiding problems is educating yourself prior to entering into any financial arrangement.


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