Auto Insurance Insurance

Is Rental Car Insurance a Rip Off?

Written by Hank Coleman

If you’ve ever walked up to a rental car counter, you’ve probably met an enthusiastic rental agent. It’s their job to speed you safely on your way. They will ask you what kind car you prefer and how long you will need it.

The rental car agent will explain how you should bring it back with the same amount of gas it has now. They will tell you that if you don’t, then they’ll charge you a premium for them to do it. They’ll ask for your driver’s license and whether or not anyone else will be driving the car.

Then, they’ll recommend that you purchase their additional car insurance coverage in order to provide yourself with the best possible protection. But, is the rental car company’s insurance worth the cost? Is it a rip off? Or, should you pony up the money to protect yourself?

Your Rental Car Insurance Options

Depending on the car you choose, rental car insurance can cost up to $50 per day. But, what exactly does rental car insurance cover?

Liability – Liability coverage protects you from damage to property other than the actual rental car that occurs while you are behind the wheel. It also protects against bodily injury to the passengers and driver of other vehicles and pedestrians if you should get in an accident. On its own, liability coverage typically costs about $5-$15 per day on average.

Personal Effects – Personal effects is an optional coverage that safeguards your possessions against theft if the vehicle is stolen or broken into by a criminal. The personal effects insurance charge for your rental car is usually less than $5 per day.

Personal Accident Insurance – The personal accident insurance policy provides medical coverage for you and your passengers in the event of an accident. The price tag on this is typically up to $5 per day.

Loss Damage Waiver – The loss damage wavier is the big insurance coverage offered by rental car companies and the one most drivers are familiar having the rental company upselling you. The loss damage wavier is the one coverage rental agents push the hardest on you because it protects you against damage that occurs to the rental vehicle itself. It also protects them. The loss damage wavier is also the most expensive component offered, averaging approximately $10-$20 per day.

Do you need all of these extra car insurances offered by the rental car companies? Maybe. Do you have your own car insurance that covers you while you rent a car? Does the credit card you use to rent the car offer car insurance coverage automatically? Again, the answer is maybe. You should check with your family’s car insurance provider and your credit card company to see what exactly they cover. The insurance coverage offered by credit cards is a great reason that you should use a credit card to rent a car. If you travel for work, your business may cover you or have a deal worked out with their corporate credit card provider to include car insurance for rental cars.

About the author

Hank Coleman

Hank Coleman is the publisher or the popular personal finance blog, Money Q&A. He’s also a freelance journalist specializing in retirement planning, investing, and personal finance. You can also find him on Twitter @MoneyQandA.

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