Buying extra insurance from a car rental company is (mostly) a waste of money. If you have car, health, and homeowners insurance, you are pretty well covered already. But there are times when buying extra insurance makes sense.
When Car Rental Insurance is a Waste
1. Loss or Collision Damage Waiver
A Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) protects you in a couple ways. If your rental car is stolen, vandalized, or damaged, the damage waiver has you covered. When a rental company decides to fix the car, you are liable for the lost income while the vehicle is in the shop. This waiver also gets you out of paying for the lost income.
If your personal insurance has comprehensive and collision coverage, paying for the waiver isn’t worth it. Remember, you may still have to pay a deductible if your insurance is used. Be sure to check with your car insurance company for details.
2. Supplemental Liability
If you hurt someone else or their property, you are liable. Buying supplemental liability coverage from the rental car company helps cover the cost of any damaged property as well as medical costs for other people.
Liability insurance is a major reason to have car insurance, and your personal policy should already cover an accident in a rented vehicle. If you are comfortable with the amount of liability insurance you already own, you don’t need to buy extra liability insurance from the rental car company.
3. Personal Accident
Medical costs and ambulance fees are expensive if you have an accident, and the personal accident insurance from the rental car company helps cover these costs. Although, the personal injury protection of your personal car insurance already covers some of these costs. If you have health insurance, it might cover a lot of medical costs as well.
Buying the personal accident coverage isn’t needed if you are comfortable with your health insurance and the personal injury protection of your car insurance.
4. Personal Effects
If your property is stolen from a rental car, the personal effects coverage helps you recover some of the cost. There are limits on how much can be recovered (especially electronics and jewelry), but your belongings are also insured by homeowners and renters insurance.
Homeowners or renters insurance is a cheap and smart type of insurance to buy. If you don’t have a policy already, you need one right away. Once you have a policy, the extra personal effects insurance from the rental company is redundant.
When Car Rental Insurance Makes Sense
1. Business Trips
When renting a car for a business trip, you need to be careful. Your personal car insurance may not cover you if you are traveling primarily for business. If your employer does not have an insurance policy to cover the rental car, buying the extra insurance could be a good idea.
2. Driving in Another Country
If you decide to rent a car in another country–especially where traffic drives on the left side of the road–buying the extra car insurance could be worth it. Your personal car insurance may not cover you in other countries, and trying to deal with insurance companies while on vacation doesn’t sound fun either.
3. Avoiding Deductibles and other Out-of-Pocket Costs
Even if you have personal car insurance, homeowners, and health insurance, you most likely still have deductibles. If you want to completely avoid the risk of paying deductibles or any other out-of-pocket costs, then buying the extra insurance from the rental company is worth it. In the end, the benefit of being completely covered could be worth the daily cost. It depends on you and your situation.
Be sure to check with your insurance companies to see how you are covered in these situations. And if you would like these articles delivered directly to your inbox, sign up for my email list below.