Do You Need Rental Car Coverage?

Two types of rental car insurance come up very frequently:
First, when you rent a car, the rental agent will ask you if you want to purchase Collision Damage Waiver, or CDW. This coverage reimburses the rental company for damage to their rental car if you have an accident. If you choose it, it will add several dollars to your daily rental rate. This might add up to $50-70 or more over the course of a week's rental.
If you have your own auto insurance policy, and your policy includes Collision coverage, then ask your agent if it will cover you in a rental car. Many policies will pay for the damage to the car. However, there are two things that your own policy still might not cover:
Most personal policies will not pay for "loss of use" for the rental car company. This refers to the money the rental car company could have earned by renting the car, if it weren't in the shop because of your accident. If they could have earned $400 by renting the car during the two weeks that it was in the shop, they might charge you for the $400. If you are concerned about this possibility, it is safer to pay for the CDW.
Most personal policies will pay if you are driving the rental car, but not if you let a friend drive. This is called "permissive use." Most personal policies will pay for damage to your own car if you give a friend permission to drive it, but they will not pay for damage to a car that you do not own if you give a friend permission to drive it (but the friend's insurance might pay). If you will be allowing someone else to drive the rental car, and that person does not have insurance, you might want to pay for the CDW.
Some personal policies will not pay for damage to a rental car if you are using it for business purposes. In that case, your company should have insurance to cover the loss. If not, or if you're not sure, you might want to pay for the CDW.
Second, you probably have the option to purchase Rental Reimbursement coverage on your personal auto policy. This coverage will pay for some or all of the cost to rent a replacement car for you when your own car is in the shop because of an accident. It usually costs several dollars per month, per car. If you have three cars, for example, it might cost you $200 per year or more.
Ask yourself, if you have an accident and your car is in the shop, will you need a rental car to replace it? If you and your spouse both work at different locations, and you each have your own car, you might want to purchase Rental Reimbursement coverage.
But what if you have three cars, including a sports car that you drive only on weekends? Or a pickup truck that you use for miscellaneous errands? If one car were in the shop, would you drive that extra truck to work? Or what if you and your wife work similar hours and could carpool? If so, then you might not need Rental Reimbursement coverage.
In the end, there are two cardinal rules for making good insurance decisions:
Never pay for coverage that you don't need; and
Never skimp on coverage that you do need.
With that in mind, ask yourself whether you need to purchase CDW from the rental company, or whether you need Rental Reimbursement coverage on your auto policy. If you need them, buy them. If you don't need them, then save your money.
For more ideas, please visit our web site at http://www.community-ins.com
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