Should You Buy Insurance on Your Rental Car?

Cars in a RowWhy should I buy the optional insurance provided by the rental car company? As an FBinsure agent, we are often asked this question. Many of our clients have physical damage coverage on their auto policy and should know the ramifications of not purchasing the additional Collision Damage Waiver, which is presented at the time of renting a vehicle.

The Collision Damage Waiver is also referred to as “Walk Away Coverage,” which basically means that any damage to the rental car would be covered by the insurance you purchased through the rental car company, so they will handle it.  Having the physical damage coverage on your auto policy will automatically extend to the rental vehicle, but it does not cover all of the costs you may incur if you damage your rental car. Without purchasing this additional coverage from the rental car agency, you may have to pay for fees in the event of an accident. The Collision and Comprehensive coverage on your auto policy will apply to the damages occurred to the rental car but doesn’t always pay for loss of use. Loss of use fees are usually excluded on rental vehicles, without obtaining the Walk Away Coverage. This means that while the vehicle is inoperable during the repair period, you could be charged a fee for each day the car is unable to be rented. Acquiring the Collision Damage Waiver or walk away coverage will cover this gap. Also, with the purchase of the walk away coverage, the rental car company can provide you with another vehicle without the worry of the damage caused to the prior one.

Car renters should also be wary when renting outside of the U.S and its territories. Many people think that their auto policy will automatically cover damages when renting a car. Other countries don’t always follow the insurance laws and regulations set by the U.S. Many insurance companies will only extend coverage to a rented car if rented within the US territory or Canada, as outlined within your auto policy. For example, if you are taking a trip to Europe or Mexico and are renting a vehicle, you must purchase insurance for the car at the rental agency. If an accident occurs, your U.S. auto policy will not extend coverage and you may be liable to pay for vehicle damages and injuries occurred.

In conclusion, FBinsure always recommends taking the additional coverage offered at the rental car service. Read the contract carefully and understand what you are agreeing to when you sign for the rental car and additional insurance. Nothing can be more frustrating than receiving an unexpected bill for damage to your rental car.