When you rent a car, you might be questioning if insurance is really necessary. It’s an extra cost, and you most likely won’t end up using it. But should you get it just to be safe? GOBankingRates breaks down when it’s worth it to get rental car insurance, and when it’s fine to pass on the added expense.
How Much Does Rental Car Insurance Cost?
Rental car insurance cost varies by company. The total insurance cost takes into account loss damage waiver, liability coverage, personal accident insurance and personal effects coverage.
Among four of the top rental car companies, your cheapest option is Budget, which will cost you $31 a day. Next is Alamo, which will cost $44 a day. Hertz will cost $53 a day and Enterprise will cost you $60. Even at the cheapest, rental car insurance can add an extra $155 in travel expenses for a five-day trip.
If You Already Have Car Insurance, You Probably Don’t Need It
The car insurance you pay for a personal vehicle covers your rental car as well, and for a better deal. At $31 a day, you’d be paying $930 a month, which is probably significantly more than your personal policy costs.
The only exception to this rule is if you’re renting a car for a business trip. In that case, you’ll need to have commercial coverage in addition to personal coverage in order for the rental car to be covered. You can also check with the company you work for to see if they have a commercial coverage policy in place that you can use when renting a car for business.
Even If You Don’t Have Car Insurance, You’re Still Covered Without It
If you have a license but don’t drive, rental car companies will still insure you without you having to pay extra for insurance. When you rent a car, the rental car company will offer the bare minimum coverage that’s mandated in the state you’re driving in.
However, it’s important to know that the minimum coverage typically doesn’t cover any damage done to your vehicle. If you were to get in an accident, you’d be on the hook for fixing the rental car. If you want to be cautious, purchasing rental car insurance in this case is a good idea.
Get Third Party Insurance for Less
If you want to feel as safe as possible (especially if you don’t already have car insurance) and get insurance on the rental car without paying a high price, there is another option. Renting your car through companies like Expedia and Priceline will give you the option to pay for collision coverage. This coverage will often cost around $10 a day, which is a third of the cost that the cheapest rental car company offers. You can also look into companies like Bonzah that offer damage and liability coverages for around $9 a day.
Check Your Credit Card Benefits for Rental Insurance
A common benefit for many credit cards is rental car insurance. The type of insurance varies, but a credit card can offer secondary insurance that can keep the price of damages down and offer reimbursements for your deductible. Some cards even offer primary insurance, which would mean you wouldn’t have to use your car insurance to pay, bypassing any potential raise in monthly payments. If you don’t have car insurance already, your credit card’s insurance automatically becomes the primary insurance.
Credit cards typically offer collision damage waiver (otherwise known as loss damage waiver), which is often the most expensive insurance that rental car companies offer. Collision damage waiver forgoes any financial responsibility for loss or damage to the rental car. It’s a good idea to check what your credit card offers before you go on your next vacation so you can save on buying rental car insurance.
Going Abroad? Buy the Rental Car Insurance
Not all car insurance coverage extends outside of the United States. Check with your policy beforehand, but be prepared to hear that the coverage is only valid within the U.S. In that case, it’s smart to buy the rental car insurance to keep you covered if anything were to happen.
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