Should I Purchase Rental Car Insurance?

Should I Purchase Rental Car Insurance?

Ahhh, sweet summertime.  Time for warm weather, grilling out, and taking vacations.   While traveling and renting a car, one question always comes up, “Should I purchase the rental car insurance?”  Well, to put it simply…”it depends”.  There are a variety of factors to consider when deciding whether or not to purchase rental car insurance.

Here are a few tips from American Advantage – Petersen in New Berlin, Wisconsin to help decide if you should purchase coverage:

 

What coverage will the rental car company offer?

  • While at the rental car counter, they will typically offer you 2 different coverage waivers – they can be purchased individually or together
  • Physical Damage Waiver: covers damage to the car itself
  • Liability Waiver: which covers resulting damage to the other person’s car and medical bills if you are at fault in an accident

What will my auto policy cover on a rental vehicle?

  • Your personal auto policy will extend physical damage and liability to a rented vehicle, within the limits of your current coverage. Example:  If you have a $500 collision deductible & liability limits of $300,000, you would have that same coverage while driving a rental
  • If you only have liability coverage on your own vehicle, you will need to purchase the Physical Damage Waiver
  • If you have collision and other than collision coverage on at least 1 vehicle, that same coverage will carry over from your policy to the rented vehicle

 

What will potentially not be covered on a rental vehicle?

  • Some rental agreements can hold you responsible for “loss of use”.  If you are in an accident while driving a rental and the car needs to be repaired, the rental company can charge you the loss of rental fees while the car is in the shop.  Example: If a rental car costs $30 a day and the car is in the shop for 3 weeks, you could be charge $30 X 21 or $630 of “loss of use”
  • Some rental agreements can also hold you responsible for “diminution in value”.  This means, the renal company can charge for the reductions in the car’s market value due to its having been in an accident.  When the repaired car is eventually sold, it may bring in a lower price.  The difference in value of the car before the accident and after the accident is the “diminution in value”.  Example:  If a rental car is worth $20,000 prior to the accident, and can only be sold for $15,000 after the accident, the diminutive value would be $5,000.  Most personal auto policies will not cover this.

Things to consider when purchasing rental car insurance:

  • How important is your time and cost of your trip?  If you’re in an accident with a rental car and did not purchase the physical damage or liability waivers, you need to file a claim with your own personal auto carrier and pay any applicable deductibles.  Reporting and sorting through the loss details can occupy enough of your time and may cause you to miss a flight or scheduled event.  Purchasing the insurance through a rental company can save time and hassle.
  • What type of vehicle are you renting?  If you are renting a U-Haul or another large truck you will most likely need to purchase the rental agency’s insurance.  There is a weight limit on your personal auto policy and most times these vehicles fall outside that limit.
  • Where are you traveling?  Your personal auto policy covers you only for travel in the USA, its territories, & Canada.  If you are traveling internationally, you will definitely need to purchase from the rental agency.

 

Have questions about purchasing rental car insurance?  Contact American Advantage – Petersen Group in New Berlin, Wisconsin!

Phone: 262-432-0789    Email: info@aapetersen.com

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