Many people rent cars for various reasons; traveling out of town for vacation or business, as a temporary replacement for a car that is in for repair, or even just to save miles on a your lease car for a weekend trip. When you step up to the counter one question the rental car agent is certain to ask is: Do you want to purchase or decline rental car insurance?
This is something to think about carefully before making a decision. Common suggestions will say rental car insurance is a waste of money. But could that advice be short-sighted? Paying a few extra dollars for the rental car insurance may actually be one of the smartest ways to spend your money.
First, contact your insurance agent to learn how your existing insurance covers damage to a rental car and the loss of personal property in it.
If you have comprehensive and collision coverage on your auto insurance policy, most policies will allow those coverages to cover a rental car. The same deductibles and conditions will apply, of course. If you pay for your rental car using a credit card, check to see if you have any coverage provided as a cardholder benefit.
But don’t assume that because you have auto insurance with comprehensive and collision coverage or charge the cost of a rental car on your credit card that you don’t need to consider rental car insurance. Here are a few things to think about when making your decision:
1. If a rental car is damaged while rented to you, your insurance company will likely pay the cost of repairing the damage the same way it would have paid to repair your own car – the cost of repair, less your deductible. But, in addition, rental car companies are likely to charge you for “loss of use” during the time their car is out of service for repair – the rental fees they could have earned if their car had been in service. You may find yourself stuck paying their highest daily rate for that car which may be far more than the discount rate you may have paid. Some rental car companies also charge you for the reduced value of their car (diminishment) now that it has been in an accident. The bad news is that, when you pay for the rental car using a credit card and sign the agreement to rent the car and decline the rental car insurance, you have pre-authorized these costs to be charged to your credit card – potentially hundreds if not thousands of dollars! Don’t expect your own auto insurance policy to pay for either of these costs. You need to purchase rental car insurance if you want them covered.
2. What if you travel out of the country? Check the coverage territory defined in your auto policy. Typically, it includes the United States of America, its territories or possessions; Puerto Rico; or Canada. If you are traveling anywhere else in the world, your auto insurance does not apply – not at all. We’re not just talking about damage to the vehicle you rent. You could be responsible for the cost to repair or replace the other person’s car. Worse yet, what if you are to blame for injuring another person in an accident? Unless you have a personal umbrella policy, you could be personally liability for the cost of their injuries. You absolutely need to purchase rental car insurance anytime you rent a car out of the country.
3. What about personal effects in the rented car? Think about the items you take with you during a trip. Beyond clothing, what about that digital camera, laptop computer, cell phones, etc.? Most auto insurance policies do not provide any coverage for personal items in the car. Your homeowner’s insurance may cover these things away from home and often anywhere in the world. But, the deductible on your homeowner’s policy will apply – could be $500; $750; $1,000. If you want to avoid filing a claim against your home insurance and having to pay this deductible while away with a rental car, you can purchase coverage for personal effects with the rental car insurance.
4. Finally, the thing most often overlooked… When away from home using a rental car, you are in unfamiliar places and driving an unfamiliar car. This alone can raise the chance of having an accident. Without rental car insurance, you will file a claim under your own auto insurance policy. This could cause an increase in your premium that may remain for several years! You can avoid this possibility by purchasing rental car insurance.
To Buy or Not To Buy – you decide!
For more details on Michigan Auto Insurance or to get a free Michigan auto insurance quote contact us at 800.225.5582.
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