auto

Do you need rental car insurance?

Tara Baukus MelloMany people think they have adequate insurance coverage when driving a rental car, either through their personal car insurance policy or via extended coverage on a credit card. In many cases, that's not true.

Without adequate coverage, you could be held responsible for all or some of the expenses associated with an accident -- even if the accident is deemed not your fault or is the result of a defect associated with the car. And the possibility of driving an unrepaired rental car that's been recalled is substantial. A recent report by the National Highway Traffic Safety Administration said that 30 percent of recalled cars in the U.S. aren't repaired, since there is no law requiring recalled cars to be repaired.

Determining if you have adequate rental car insurance coverage is not as simple as confirming you have rental car coverage on your personal car insurance policy. This coverage can vary widely by state and insurer. For example, drivers who have some rental car coverage on their personal car insurance policy may find that it only covers rentals when your car is in the shop -- but not if you rent a car for travel. Other policies may not provide enough coverage due to policy limits. For instance, in the event of a total loss you may be limited to the value of your personal car, which may not be enough if the car you are renting is worth more.

Many credit card companies offer the "perk" of added rental car insurance when the cars are rented using that specific credit card. However, the most common perk is the reimbursement of your deductible, which is usually only reimbursed after your insurance company settles the claim.

If your credit card company provides rental car coverage beyond reimbursing the deductible, make sure you read the fine print carefully. Some cards require you to pay the bills first and will reimburse you later. Some limit or don't cover cars that are rented for an extended period of time, and some credit cards won't cover certain types of cars that are rented.

Even if you do have adequate coverage, you will still be responsible for your deductible, if applicable, and your coverage will be limited to the coverage and amounts you have purchased. If this coverage is not enough, you will be held liable for the remainder by the rental car company and potentially by any injured parties.

If you learn that you are not adequately covered when renting a car, you can purchase additional coverage from the rental car company. Most rental car companies offer a wide variety of coverage, ranging from those to cover the deductible on your personal auto insurance policy to extensive coverage that would protect you, your passengers, the rental car, your belongings and the other people and cars involved. Ask about these optional products and be sure to read all the documentation to understand the coverage you are purchasing before you sign the rental agreement.

Ask the adviser

If you have a car question, e-mail it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

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