Do I need rental car insurance?

There are times when you will need to rent a car. It can be for official purposes, personal, travel or even business. Apart from the normal auto insurance plans, there is a rental car insurance plan too. So when you pick up a car on rent, the first thing you need to check with the car rental company is whether you are insured or not. Before starting out on the long drive to your family holiday destination, you need to check on a few things:

The first and the foremost is your existing auto insurance policy. Call your insurance agent or go through your auto insurance coverage details before renting a car. There is no point paying extra money at the rental counter for rental car insurance if it is already being covered by your existing policy. Most auto insurance policies provide liability insurance, which offers financial assistance if you injure someone in an accident. But the damages caused to a rental car will be covered only under a comprehensive or collision coverage. If you auto insurance policy includes this coverage then you can go ahead and rent a car. If you are calling your insurance agent then ask specifically about collision damage waiver (CDW) and liability. The collision damage waiver will cover the damages on the car being driven by you and liability will cover the damage done by you to someone else.

Credit cards

Most people have credit cards but how many of them know that credit cards can offer auto insurance or liability coverage. There are some credit cards that will pay for damages to a rental car if an accident takes place. To be eligible for this, you will have to decline the collision damage waiver (CDW) offered by rental car companies and also have to pay the entire rental charge through your credit card. But always remember that your credit card comes with some limitations or exclusions and you need to know what they are. Some of the limitations will include limited rental contract while others will offer rental insurance only if you rent a car from their list of approved dealers. If you know for sure that your auto insurance or credit card provides coverage on rental cars then there is no need for you to accept collision damage waiver (CDW) from the rental company.

The important thing to remember is that a credit card will only provide coverage for the damage to the car and not for liability claims. Also, the coverage can be for a limited period of time or specific to a geographical area. You should find out information on this aspect from your credit card company before you actually rent a car.

If at all, your insurance coverage or credit card doesn't cover rental cars then you will have to purchase additional coverage through a rental agency. The collision damage waiver (CDW) is available with rental agencies but it is not an insurance cover. It is a guarantee that the rental company will provide financial assistance for a certain amount of damage on the car. If you don't purchase the CDW then you will be completely responsible for the damages caused