Coverage and Claims
Should I buy Rental Car Insurance?
If you're renting a car, you'll usually be asked if you'd like to purchase an insurance package from the rental car company. Do you really need it?
Prepare In Advance - Get Rental Coverage as part of your Regular Auto Insurance
The easiest, and the best way to get insurance for a rental car is purchase a regular automobile insurance policy that explicitly extends collision and comprehensive coverage to rental cars in any state or country. If you don't own a car and you rent on a regular basis, you might want to purchase a "nonowner" policy that will give you the same type of coverage. However, in the absence of such policies, you may wish to consider the package on offer from the rental car company - but be sure of what you're getting.
Does my Credit Card Company offer Coverage?
Many major credit card companies claim to provide you with insurance coverage when you use their card to rent an automobile. However, you should read the fine print or get written verification from the company, because the coverage provided by your credit card is not always full coverage.
Some credit card companies only offer coverage if you rent your car from a particular agency. Some limit the days for which coverage is available. Some will only provide coverage for certain types and/or classes of cars. With some cards, the coverage is not automatic and you must enroll in a program to get coverage. Some cards that advertise automatic rental insurance really only reimburse you for the deductible that you would have to pay under your regular insurance policy. Still others may provide only collision and comprehensive coverage, leaving you exposed for personal injury or property damage to others. Contact your credit card company and get specific information on their coverage.
What About Rental Company Packages?
The insurance packages that you purchase from a rental car agency (typically called "loss damage waivers") may or may not provide the protection you need. In your rush to get out of the airport, you may not realize that the loss damage waiver you purchased insures the rental car against theft, but not the contents. That could be a big surprise when your laptop computer and expensive camera are stolen from the rental car along with your luggage, and the rental agency rejects your claim (check your homeowners insurance policy in this case--you may be covered). Similarly, you may discover that the loss damage waiver you purchased for liability only provides limited coverage. Further, many loss damage waivers exclude certain items and/or situations from coverage.
Read the fine print, or get verification from an agent if you have any doubts.
What if I have a regular policy, but it isn't full coverage?
It is possible that you have insurance on your personal car, but you don't carry collision and comprehensive, or sufficient liability coverage. It may not be necessary to call your agent and add all that additional coverage just so that you will be protected when you rent a car in Mexico during your upcoming vacation. You can probably close the gaps in your coverage using loss damage waivers and coverage offered by your credit card insurer. However, as discussed above, you need to be cautious. You want to be sure you are getting the coverage you need.
Other sources of coverage
If you have suffered a loss that isn't covered under your auto policy, don't forget to check your other insurance policies. For example, if personal property has been stolen from your rental car, it may be covered under your homeowners or renters policy. Similarly, certain medical policies may cover costs of injuries not covered under your regular automobile plan.
As always, check with your insurance company to find out exactly what's covered under your own auto insurance policy.
Please note that this description/explanation is intended only as a guideline.