Rental Car Insurance When You Need it and When You Don’t

Posted on August 22, 2013 by

According to a USA Today poll, 42% of consumers were “thoroughly confused” when it came to the optional automobile insurance coverage offered by rental car companies.

When polled, travelers appear divided on the value of optional coverage. Some think it is nothing more than a profit center for the rental car companies. Others think you are crazy for not having optional coverage in the event you happen to get into a car accident.

So how do you decide whether or not to pay for the additional coverage offered by rental car companies?

Car rental insurance agreements vary from company to company, but these are a few clauses that most state laws require:

  • COLLISION DAMAGE WAIVER, also known as “optional vehicle protection” or loss damage waiver, can cost as much as $19 per day. This coverage, if accepted, eliminates your financial liability for loss or damage to the rental vehicle, its parts and accessories, provided the vehicle is used in accordance with the terms and conditions of the rental agreement.

Also, I have been involved with situations where the renter does not take COLLISON DAMAGE COVERAGE and then the rental car is involved in a collision. The renter gets billed for the entire amount of the damage. The rental car company then tells the renter–pay us first (ouch!) and then seek reimbursement with your own insurance company. In this situation, the renter would still be responsible for the deductible on his own auto insurance policy.

  • LIABILITY INSURANCE provides protection for up to $1 million and costs between $7 and $14 a day. A California driver already has liability insurance coverage under his/her own car insurance policy in the amount stated in the policy. You would not need optional liability coverage unless you are planning to drive outside of the country or you wanted higher insurance than the amount stated in your own policy.
  • PERSONAL ACCIDENT INSURANCE covers medical and ambulance bills for the driver and passengers in the event of an accident. This coverage costs an additional $1 to $5 daily. Generally, your health insurance or personal injury protection (Med-Pay) under your own auto insurance would typically pay for these types of bills.
  • PERSONAL EFFECTS COVERAGE is not always included in personal auto insurance policies. Personal Effects Coverage protects against theft of items in the vehicle, such as laptops, golf clubs or cash. This coverage generally costs between $1 and $4 a day. It may be more cost effective, however, to purchase a “floating policy” under home or renters insurance, so that valuable items are fully protected at home as well as on vacation.

Some credit cards offer protection if you pay for the rental with the card, but these can vary. Check with the issuing bank regarding your specific credit card’s protection.

There are also limits or special insurance requirements for driving outside of the U.S. Check with your auto insurance company before you leave to find out what your policy covers abroad.

Even if you find your auto insurance covers your rental car, there is one more thing to consider when contemplating whether or not to pay for optional coverage from a rental car company. If you file a claim on your personal auto insurance policy for an accident you cause with a rented car, your current auto insurance company may mark you as a higher risk driver. The result is an increase in your auto insurance premium. It may be better to pay for rental car insurance for the few days rather than risk years of higher auto insurance premiums.

The best advice and the most important thing to do… plan ahead. If you have any questions, call your auto insurance company and ask them directly. And take a couple of minutes to read the Rental Car Agreement.

Contact the Law Office of Marvin S. Lanter

If you still have questions after you have looked over your policy, contact me at 310-276-1142. I am happy to go over the details with you.

I fight aggressively for people who have been injured while driving a rental car and also by people injured by rental car drivers. Contact me today for a free case evaluation at 310-276-1142. Night and weekend appointments are available by request.

© 2017 The Law Office of Marvin S. Lanter, Los Angeles Personal Injury Lawyer. All Rights Reserved.
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