Rental Car insurance : Is it really Worth Buying?

If you don’t intend to try and hoon your rental Taurus, you might wonder if you’re covered in the case of unintentional damage. With so many options at the car rental counter, it may be tempting to buy whatever insurance protection is available to safeguard your trip. But many travelers don’t realize they’re more than likely duplicating coverage they already have.

Properly insuring a rental car can be confusing, frustrating and downright daunting. Unfortunately, many consumers do not even think about car rental insurance until they get to the counter, which can result in costly mistakes—either wasting money by purchasing unnecessary coverage or having dangerous gaps in coverage.

We’ve heard many versions of how rental car coverage works, including a belief that you do not need car insurance when you’re in your home state, when you’ve got a good driving record and if you’re first name is Ted. The best thing to do is to call your insurance agent and credit card company in advance. Just because you’ve used a gold or platinum card in the past, don’t assume that it still offers the same protection plans — the cards’ insurance benefits can change.

States have minimum age requirements for renting a car and most major rental car companies refuse to rent a car to someone who is under 21 and in some cases under 25. In addition, some rental car companies now investigate your driving record and/or credit history so check with the rental car company before picking up the car. If you choose not to buy the waiver, make sure your coverage includes collision, comprehensive, liability and loss of use (a fee rental companies charge for the income they lose when the car is out of commission). Usually, auto insurers don’t cover loss of use, but some credit cards do.

The truth lies nowhere in between. According to the Boston Globe, many personal auto insurance plans actually cover most, if not all, of the damages. The collision damage waiver, also known as optional vehicle protection or loss damage waiver, can cost as much as $19 per day. This is not technically an insurance product, but instead shifts liability for collision damage from the person renting the car to the car rental company. This also covers for “loss of use,” or time a damaged car can’t be rented because it is being repaired.

Waivers, however, can become void if the accident was caused by driving illegally or on unpaved roads. If you have auto insurance and credit cards, loss or collision damage waivers are largely unnecessary because they usually duplicate coverage you already have. But know exactly what you’re covered for before you get to the counter, or you could be in for some unpleasant surprises if you do have an accident. You’ll have to call your agent to check, but it should be included in most comprehensive plans.

For those who don’t own a car but are frequent car renters or borrowers, another option for avoiding repetitive insurance fees is non-owner liability policies. These can cost anywhere from $200 to $500 a year. It’s also possible that your credit card covers the damage, with American Express offering a coverage plan. If your credit card company automatically doesn’t offer the service, you might want to check to see if it is an option as it may be cheaper than what the rental companies offer. If nothing you’re enrolled in covers it, then you might want to consider some options Before you rent, check with your credit card companies to see what kind of coverage they offer if you charge your rental. Some conveniently offer full rental coverage for a relatively small fee, or even free, depending on the card.