There is really no simple answer to the question of whether or not you should buy the insurance your rental car company offers when you have your own automobile insurance policy. That said, while you don’t necessarily have to, you probably should and here’s why.
Rental Cars and Insurance Coverage
The rental car company has a fleet of cars they are willing to make available to the public for use. In order to do that, they need to make sure the car is properly covered not only for state-mandated liability coverage, but for comprehensive and collision damages as well. That way the car can be repaired if you are involved in an accident.
Even though you have your own automobile insurance policy, typically only the coverage you have on your vehicle will carry over to the rental car. Let’s say, for example, you own a 1995 Ford Taurus with liability coverage, but you do not have comprehensive and collision coverage. You may only have liability coverage when driving a rental car as well. The rental car company will definitely require full coverage. Therefore you’ll have to buy their coverage if you rent a car, since your personal coverage is not sufficient.
If, on the other hand, you have a new 2014 vehicle with full coverage – liability with comprehensive and collision coverage – you would not necessarily be required to purchase their insurance and will have enough coverage to transfer to the rental car if needed.
That isn’t the end of the rental car insurance story…
Understanding Loss of Use Coverage
What happens if you rent a vehicle and cause an accident? The vehicle will have to be repaired. The damages themselves will be covered by the insurance policies in question, but while the car is being repaired, the rental car company can’t earn income from renting it to other people. This is called “loss of use.”
Since you were the person contracted to that vehicle at the time of the accident, the rental car company could hold you responsible for this loss of use, charging you not only for the days you rented the car, but for the days they can’t rent it to someone else because of your negligence. Depending on the severity of the repairs needed, the bill could very quickly add up to a large sum.
Your personal car insurance policy will not always pay for loss of use, but most of the insurance policies offered by the rental car company will. It’s important that you read the fine print and ask the rental agent outright if loss of use is covered by their insurance to be sure.
Even though it seems more convenient to show them your current insurance ID card, the added cost of buying the third-party insurance is pretty nominal compared to paying those loss of use fees. Make sure you ask the rental car company about loss of use coverage and, if in doubt, talk to your own insurance agent before renting a vehicle for help and advice.