It is nearly impossible these days to purchase anything without some form of extended warranty or supplemental insurance coverage being offered right at the point of sale. From major appliances on down to USB drives, additional insurance is usually offered and–let’s be honest–considered for at least a second or two, as every worst-case scenario races through your cerebral cinema of the mind.
The truth is, insurance is big business and the best insurance (from the insurer’s point of view) is the insurance that will never be used. Most of us have been conditioned to “Just say no” to most of these “policies,” and rightfully so, as many of them simply overlap the original manufacturers’ warrantees, creating redundancy. So, when we get to the car rental counter, we might be tempted to just say no, but is that the right thing to do? This is a case of what you don’t know might hurt you.
What’s Your Policy on Rental Car Insurance?
It is probably safe to assume that if you own a car, you have insurance. That being said, the first thing you need to know is whether your personal insurance covers you as an operator of a rental vehicle. The short answer here is that the overwhelming majority of carriers do cover rental vehicles with the same limitations and deductibles as personal vehicles, but there are always outliers. The caveat is that you are still liable for the deductible amount, should there be a claim, and that the claim will remain on your insurance records for the foreseeable future (and possibly beyond).
A claim against your policy could have an adverse effect on your annual premiums, making you wish you paid for the rental insurance. Take a moment, before you’re confronted with this decision at the rental car desk, to familiarize yourself with the details of your current auto insurance policy.
What’s In Your Wallet, Anyway?
So, maybe you have done the homework, and you now carry the credit card with the most rewards points and the best perks available. Rental car insurance? Of course that’s included. Why else would the guy on the phone have told you about it?
The reality is that many of these rental car insurance benefits only kick in after you have exceeded the limits on your own personal insurance. These types of policies, known as “secondary” or “supplemental” policies, are designed to only cover overages on other policies and may never end up paying out anything in benefits.
The important thing is to ask is if the rental car insurance offered by your credit card company is the primary insurance on the rental vehicle. It is also important to know what type of coverage they offer. You may find that their coverage is somewhat limited, as many of them do not cover injury, property damage, taxes, damage to other vehicles, diminished value or tire wear-and-tear. It is also important to note that in order to be covered through your credit card company, you have to first refuse the coverage offered by the rental car company.
The Net/Net on Rental Car Insurance
The bottom line on rental car insurance is that it could be the best money you ever spent if there is cause to file a claim. Although the coverage could add up to $50 to your daily rental rate, in many cases, the additional cost would still be less expensive than having to pay the deductible for your personal insurance, assuming a $500 deductible. There is also the added benefit of not having to deal with a claim after you have returned from your vacation or business trip. As they say, in this world, the only certainty beyond death and taxes, is uncertainty. Sometimes it makes sense to pay a little extra to keep life’s uncertainties at bay.