auto

How important is rental car insurance?

Tara Baukus MelloDear Driving for Dollars,
My wife and I recently planned a trip, and when she was reserving the rental car online, the form asked if we wanted insurance coverage. I thought the car insurance that rental car companies sold was just a way for them to make a few extra dollars, but my wife is concerned we shouldn't be going without. How important is it to buy the insurance the car rental company is offering?
-- Bill S.

Businessman giving car key to man © Mr. Exen/Shutterstock.com

Dear Bill,
Having insurance on your rental car isn't important at all -- assuming nothing happens!

Like any insurance policy, rental car insurance provides you some protection if you're involved in a crash or your rental car is stolen. If nothing goes wrong, then you are right -- the car rental company did make a few extra dollars. But in the event that something does happen, you'll want the peace of mind in knowing you are covered and won't be facing a steep bill for a car you don't even own.

That said, it's quite likely that your car insurance policy covers you for any car you are driving, including one you have rented. If you used a credit card to rent a car, then your credit card company may also provide coverage. It's important that you check your car insurance policy (as well as your credit card agreement if you are looking for coverage there) to see if you have rental car coverage and the limits of your policy. It's quite common for credit card companies that offer rental car insurance as part of their benefits to cover only damage to the car and not any personal injury costs, while car insurance policies that cover rental cars are more likely to cover both.

Be careful, though, because some car rental companies not only require you to pay for any damage on the car, but also for the days it lost when the car couldn't be rented, which could get quite pricey since the car could be out of commission for a week or more. Your personal car insurance policy may not cover the car rental company's loss of use.

Check your auto insurance policy and your credit card terms to see exactly what is covered and then read through the rental car agreement thoroughly so you know what you are responsible for. Only then can you make the right choice about whether to accept or decline the car rental insurance.

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If you have a car question, email it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories. Follow her on Facebook here or on Twitter @SheDrives.

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