When Do I Need a Rental Car Insurance?

Car Rental Companies

Renting a car for a short vacation trip? Here is a question you need to ask yourself: Do I need a rental car insurance or not?

Unfortunately, the question is always difficult to answer. All car insurance policies differ and coverages also vary by location.

If you already have a personal auto policy, you may have coverage that extends to your rental car. Check for coverage of any non-owned auto and make sure you have coverage for physical damage of your own vehicle.

Some states provide coverage for rental cars under the liability, rather than physical damage. If you have a low liability limit, this might not cover the full value of the rental car in case of a crash.

If you charge the full rental cost to your credit card, you should also check with your credit card company. One benefit often offered by credit card companies is a rental car loss damage waiver. This type of waiver (a.k.a Collision Damage Waiver) may also be offered by your car rental company. It is not an insurance. It’s an option that relieves you off of financial responsibility if the car is damaged or stolen while under rental contract. The waiver allows you to drop off the car and walk away, regardless of any damage you caused.

Also check your existing auto or homeowner insurance if it will cover the loss of personal property from a rental car. Protecting valuable personal belongings you are taking with you on a trip might be one reason for purchasing a separate rental car insurance policy.

If you are driving out of the country, be extra careful. There are very often limits to any insurance if an accident happens abroad. As an example, American liability insurance is not valid in Mexico for bodily injury. There is no coincidence that you will see several stores or just storefronts selling Mexican car insurance near the Mexico border.

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