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Should I Get Rental Car Insurance?

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Rental cars are hot.

It’s a supply-and-demand dynamic that’s not cooling off anytime soon.

First, there are the travelers, who are hitting the highways and backroads in record numbers as road trips to domestic destinations are a popular choice for many.1 When someone is thinking about logging hundreds or even thousands of miles in a single trip, there are a number of reasons that a rental car may be more attractive than their personal vehicle. (We explore these reasons in this Rental Car Insurance article)

Then there are the rental car companies, which have fewer cars on the lot for reasons ranging from ride-sharing competition to pandemic uncertainty.2

Big demand, short supply.

So, hit pause for a moment. And if you’re planning your trip sooner than later, and haven’t yet booked your rental car, bring up another web browser window and multi-task.

Now that you have the rental car covered, it’s time to tackle what can be an even tricker situation to navigate: rental car insurance. There are a number of scenarios to consider when making decisions about how to best insure your rental car, from where you’re going to what you’re renting.

We’ve broken down a few of the more common situations below.

Do I Need Rental Car Insurance?

This question is an obvious starting point for figuring out the best way to make smart decisions and gain some peace of mind around renting a car without potentially being on the hook for thousands of dollars in repairs and other costs.

But different travelers are often asking different things with the same question. For example, one may be asking, “Do I need to buy all the insurance options that the worker behind the rental car counter is trying to sell me?” And someone else may simply be wondering whether they should have some plan or product in place in the event of a mishap with their rental car.

We believe that by asking some of the more specific questions below — all of which we often hear from travelers — you can get answers to best equip you to make sensible choices regarding rental car insurance.

Do I Need Rental Car Insurance If I Have Car Insurance?

You betcha. First off, getting in an accident may be more likely when you're driving unfamiliar roads — navigating traffic while scouring street signs for your next turn. Have you ever braved a Boston roundabout or LA rush hour? Exactly.

Add to that the fact that your auto insurance company can slap a rate increase of 34% on you if you get in an accident — and that’s just the average increase. Rental car insurance can protect you from these costly spikes in your insurance premiums by working around your insurance provider.3

Rental car insurance may also protect you from fees for "loss of use,” which is something rental car companies claim when their car is in the shop after an accident. They're losing out on rental fees on that car, so they want you to pay for their financial loss. In many states, rental car insurance policies don't cover loss of use, but Allianz Global Assistance's Rental Car Damage Protector does.4

Rental Car Damage Protector is a cost-effective alternative to rolling the dice with your own insurance or shelling out for rental car agency plans. With up to $75,000 in collision/loss damage insurance, coverage for trip interruption and baggage loss/damage, plus 24-hour hotline assistance, it’s a no-brainer solution for rental car insurance.

What Does Rental Car Insurance Cover?

It depends on what type of rental car insurance we’re talking about. There’s the Collision Damage Waiver, which provides coverage for damage when your rental car is damaged or stolen.  Then there’s Personal Accident Insurance, which can cover medical fees, ambulance transportation, and death benefits for the rental car driver and passengers. Finally, Personal Effects Coverage can cover theft from a rental car.5

Does My Personal Car Insurance Cover Me Overseas?

Probably not, unless we’re talking about Canada or areas of Mexico right near the border.6

Driving in foreign countries can be risky, whether you’re adjusting to driving on the other side of the road, translating road signs on the go, or simply figuring out where the emergency brake is located. So, even though some countries require it and others do not, you’ll definitely want some form of rental car insurance. (Check out our article on some of the most dangerous destinations for drivers.) Also keep in mind that having a “local” rental car insurance plan will protect you in case of collision or theft, which may run rampant depending on your location.

While Rental Car Damage Protector is a viable option for many destinations abroad, it does not cover cars driven in Israel, Jamaica, the Republic of Ireland, Northern Ireland, and jurisdictions where the law doesn't allow this coverage.

Does Rental Car Insurance Cover RV Trips?

No. Rental car insurance doesn't always cover every type of vehicle. Common exclusions include trucks, campers, trailers, motorcycles and luxury cars. If you're planning to rent an RV for a cross-country trip or a Lamborghini for a driving tour of Italy, a typical rental car insurance plan won't cover you. That said, a travel insurance plan can provide trip cancellation and interruption benefits to reimburse you for pre-paid, nonrefundable fees including RV rental and campground reservations.7

What Happens If I Damage a Car Without Insurance?

Perhaps the best case scenario is that you only have to hand over money for the damage you caused. But you could also face civil litigation as well as penalties including loss of license, fines, and even jail time.

And then there’s the chore of trying to find a company who will insure you afterward at a reasonable rate.8

When it comes to having any uncertainty regarding rental car insurance, the golden rules is to always ask. Never assume. Otherwise, you could end up in a strange place with no car and a big bill. When instead, you could have avoided the situation entirely by purchasing Rental Car Damage Protector for just $11 per calendar day.

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Apr 12, 2021