Factors to consider before, during and after renting a vehicle
Last year, automobile rental was a $24-billion-plus industry, according to Auto Rental News. Needless to say, a lot of people are renting cars. But do these individuals know what they should about the insurance they need for rental cars? Read on.
Properly preparing for a trip to the rental car counter sounds silly, but research is important! You wouldn’t want to make costly mistakes like purchasing coverage that you don’t need, or worse, not purchasing coverage that you do need!
There are, however, a few things you need to consider before you even rent the car. First, states have minimum age requirements for renters, and most major rental car companies won’t rent to someone under the age of 21. The younger the renter, the higher the rental rates. Additionally, some rental companies look into credit history and driving record before car pickup, so it helps to know if that is the case ahead of time.
Calls to Make
According to the Insurance Information Institute (I.I.I.), the first step anyone attempting to rent a car should take is to call your insurance company.
“Find out how much coverage you currently have on your own car. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car, providing you are using the car for recreation and not for business,” the I.I.I. recommends. “If you have dropped either comprehensive or collision on your own car as a way to reduce costs, you will not be covered if your rental car is stolen or damaged in an accident.”
Insurance companies may also pay for administrative fees, loss of use or towing charges, as well. However, in most states, diminished value is not covered by insurers, so make sure to ask all the right questions.
Credit card companies also offer insurance benefits at times, but it always differs by company and/or bank issuing the card and the type of card. Other cars or property and personal belongings are not usually covered, but damage to or loss of the rented vehicle may very well be. Likewise, some cards cover personal liability coverage for bodily injury or death claims, but most do not – same with towing coverage, diminished value and administrative fees.
Policies are always changing, so call the toll-free number on the back of the card to find out exactly what kind of coverage is available to you. If you have multiple credit cards, call around to find out which offer is best. Request that the credit card company send you their coverage information in writing, if you do decide to depend on a credit card for insurance protection, instead of that from an insurance company. You may need that confirmation when picking up the vehicle. With all that being said, credit card benefits are usually secondary to the insurance offered by the rental car company or your personal insurance protection.
Types of Insurance
Insurance is regulated at the state level, so coverage and costs will vary. However, coverage options are generally similar nationwide:
Loss Damage Waiver (LDW)
An LDW is not technically a type of insurance. It is, however, a document that will relieve renters of financial responsibility if their rental car is damaged or stolen. These waivers may or may not provide towing and administrative fees and coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car cannot be used because it is being fixed. Keep in mind that the waivers are voided if an accident is caused by speeding, driving on unpaved roads or driving while intoxicated. If, upon checking with your current insurance company, you deem the LDW necessary, it usually costs between $9 and $19 a day.
The state-required amount of liability insurance that is lawfully required to be provided by rental companies doesn’t provide much protection. Usually sticking with your own liability insurance will suffice, but supplemental insurance through the renter will run between $7 and $14 a day. A more cost-effective option may be to elect an umbrella liability policy.
“Umbrella liability insurance is so named because it acts like an umbrella, sitting on top of your auto and homeowners (or renters) liability policies to provide extra protection including accidents while driving your own car or one that you rent,” states the I.I.I.
For a million dollars’ worth of coverage, these policies typically cost $200 to $300 per year.
Personal Accident Insurance
This protection usually costs around $1 to $5 a day, and is used to cover medical and ambulance bills for injuries you or your passengers sustain in a car wreck. Current health or auto insurance may already cover this, as well, so be sure to check.
Personal Effects Coverage
This is insurance for the items in your car in the event of their theft. Through the rental car company, this coverage costs between $1 and $4 a day, but it’s not necessary if your current homeowners or renters policy includes off-premise theft coverage. Similarly, a “personal articles floater” under your homeowner’s policy protects valuable items such as jewelry and musical equipment both at home and while traveling.
Yes, there seems to be countless things to think about before renting a car, but if you do your homework, you can save yourself a lot of money that adds up during a trip. As a side note, keep in mind that there are special considerations for renting vehicles abroad, regarding both insurance and other factors, like needing an international driver’s license.
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