Does it make sense to purchase insurance when I rent a car, or am I already covered?
With so many options at the car rental counter, you may be tempted to buy whatever insurance protection is available for that extra piece of mind.
“The worst is when you are standing at the counter, with a line behind you, and you feel pressured to buy it all because you don’t have a sense of what kind of coverage you need and what you don’t. That’s when you make bad decisions in a haste.” says Carolyn Gorman, vice president of the Insurance Information Institute in New York. “The most important thing to do is plan ahead.”
The following information may help you understand what rental companies offer and where you may need to fill in the gaps. We recommend that you ask your Farm Bureau Insurance agent if there are any situations in which your policy would not cover the rental. You can protect yourself and save money by taking a few minutes to understand what your policy will cover.
What the car rental companies offer:
Collision Damage Waiver (CDW) is also referred to as a Loss Damage Waiver (LDW).
You may not need this protection if: You have comprehensive and collision coverage (coverages S and T on a Farm Bureau policy) on your own car, you likely will not need this additional protection. Comprehensive insurance covers vehicle damage cause by accidents such as fire, theft, hail, or vandalism. Collision insurance covers the cost of repairs or the actual cash value of a totaled vehicle if damaged in a crash or rollover. Farm Bureau comprehensive and collision coverages apply to damage to a rental vehicle (passenger car, pickup, or passenger van) if driven and rented by an insured who has coverages S and T on at least one vehicle on their personal policy. These coverages do not apply to someone else who is driving the rental car. A deductible applies under comprehensive and collision accidents.
A rental contract may require you pay additional fees to the rental company if the vehicle you rent is damaged. These contract fees are usually not covered by a personal auto policy.
Liability insurance covers medical expenses and damages to another person’s property as a result of a car accident caused by the insured’s negligence.
You may not need this protection if: You have adequate liability insurance (coverages N and O on a Farm Bureau policy) on your own car, you may consider forgoing this additional liability protection. Coverages N and O apply to a rented vehicle driven by an insured if rented by the insured or if driven with the owner’s permission. An insured means you or the entity named in your policy declarations. If you are an individual, insured also means—if residents of your household— your spouse, your relatives, or minors in the care of you or your relatives. No deductible applies on this coverage.
Personal effects coverage provides for the theft of personal items inside the rental car.
You may not need this protection if: You have a homeowner’s or renter’s insurance policy with personal property coverage, (coverage C on a Farm Bureau policy) it will generally cover this already. If you travel frequently with expensive jewelry or sports equipment, you may want to consider purchasing a floater (listing these items in Section IV, Inland Marine Insurance on a Farm Bureau policy) under your home or renters insurance so these items are fully protected when you travel.
Car Rental Insurance Tips provided by the National Association of Insurance Commissioners
- Review your auto insurance policy or call your insurance agent before you reach the rental car counter.
- If your current policy doesn’t offer coverage for a rental car, see if an insurance rider can be added for a small fee.
- Many credit cards include some level of collision and theft protection. In most cases, these benefits are secondary to your personal auto insurance or the car rental company’s insurance, meaning the credit card company will only pay claims after other insurance coverage has been exhausted. The NAIC recommends you call your credit card company and ask about benefits.
- If you’re unsure of your current auto insurance coverage and your credit card does not provide benefits, it might be wise to purchase the liability insurance and collision damage waiver at the car rental counter.
- Keep in mind that if it is a longer-term rental (e.g., a week, a month or more), there might be limitations on the coverage your existing auto insurance policy provides. Check with your insurance company or agent for details.
- If you don’t own a car, you might want to consider purchasing a non-owner auto insurance policy, because it provides benefits in addition to coverage for a rental car.
- When traveling on business, a personal auto policy will generally not apply, so check with your employer for guidance.