Is it worth taking out rental car insurance?
unimagine / iStock.com
When renting a car, you may wonder if insurance is really necessary. It’s an extra cost, and you probably won’t end up using it. But should you get it just to be safe? GOBankingRates breaks down when it’s worth getting rental car insurance and when it’s good to pass on the extra expenses.
See: 22 side gigs that can make you richer than a full-time job
More: Best states for deportation assistance
How much does rental car insurance cost?
The cost of rental car insurance varies by company. The total cost of insurance takes into account damage waiver, third party liability, personal accident insurance and personal effects coverage.
Among four of the best car rental companies, your cheapest option is Budget, which will set you back $31 per day. Next is Alamo, which will cost $44 per day. Hertz will cost $53 per day and Enterprise will cost you $60. Even at the cheapest price, rental car insurance can add an additional $155 in travel costs for a five-day trip.
POLL: How much do you plan to spend on travel this summer?
If you already have car insurance, you probably don’t need it.
Auto insurance you pay for a personal vehicle also covers your rental car, and for a better deal. At $31 a day, you’d be paying $930 a month, which is probably a lot more than your personal policy costs.
The only exception to this rule is if you are renting a car for a business trip. In this case, you will need to have business coverage in addition to personal coverage for the rental car to be covered. You can also check with the company you work for to see if they have a business coverage policy in place that you can use when renting a car for business.
Even if you don’t have auto insurance, you’re still covered without it
If you have a license but are not driving, car rental companies will still insure you without you having to pay extra for insurance. When you rent a car, the car rental company will provide you with the minimum coverage required by the state in which you are driving.
However, it is important to know that the minimum coverage generally does not cover damage to your vehicle. If you were to have an accident, you would be obliged to repair the rental car. If you want to be on the safe side, taking out rental car insurance in this case is a good idea.
Get liability insurance for less
If you want to feel as safe as possible (especially if you don’t yet have car insurance) and get insurance on the rental car without paying top dollar, there’s another option. Renting your car from companies such as Expedia and Priceline will give you the option of paying for collision coverage. This cover will often cost around $10 per day, which is a third of the cost offered by the cheapest car rental company. You can also look to companies like Bonzah that offer damage and liability coverage for around $9 a day.
Check your credit card benefits for rental insurance
A common benefit for many credit cards is rental car insurance. The type of insurance varies, but a credit card may offer secondary insurance that can reduce the cost of damages and provide refunds for your deductible. Some cards even offer primary insurance, meaning you wouldn’t have to use your car insurance to pay, bypassing any potential increase in monthly payments. If you don’t already have auto insurance, your credit card insurance automatically becomes the primary insurance.
Credit cards typically offer collision damage waiver (also known as damage waiver), which is often the most expensive insurance offered by car rental companies. Collision Damage Waiver waives all financial responsibility for loss or damage to the rental car. It’s a good idea to check what your credit card offers before you leave for your next vacation to save on buying rental car insurance.
To go abroad? Buy rental car insurance
Not all auto insurance coverage extends outside of the United States. Check with your policy ahead of time, but be prepared to hear that coverage is only valid in the United States. In this case, it is a good idea to take out rental car insurance to protect you if something were to happen.
More from GOBankingRates