Road trips can be an exciting way of traveling. They easily allow you to explore different destinations at your own pace, reach locations that are harder to reach by public transport or that are off the beaten path. If you own a car, you know that having insurance is essential.
However, if you enjoy a car-free life and are seriously considering renting a car on your next trip (whether you’re thinking of a road trip or not), you’re probably not aware of the fact that you’ll be asked to have a valid car rental insurance policy.
There are multiple options available in the market and, therefore, you need to learn and understand the differences between them so that you opt for the best one for you.
Auto Insurance Policy with Car Rental Coverage
Many car insurance policies include car rental coverage for an extra fee. If you have it, you can take advantage of it as you won’t have any out of pocket expenses. Simply tell the rental agent at the pickup desk that you already have auto insurance that covers you.
However, you should know that most auto insurance policies have a deductible that can be as high as $500-$1500, depending on the policy you have. Needless to say, this can be pretty painful if you have to make a claim. And, to make things worse, your premium could increase up to 44% if it is your first claim. Yes, that hurts!
Car Rental Company Collision Damage Waiver (CDW)
This option provides drivers with coverage for any damage to the rental vehicle without having to make a claim with an insurance company or a credit card. You can even return the car in pieces and leave the agency as long as you haven’t wrecked it due to drunk driving or reckless driving.
However, car rental companies are remarkably known for charging really really high fees for the Collision Damage Waiver. In some cases, fees can be up to $30-$40 per day, which can get really pricey if you’re renting the car for a week or two.
Third-Party Car Rental Damage Insurance
Third party car rental insurance offers several attractive advantages. For starters, it is much more affordable than the one offered by car rental companies, coming in at under $10 a day or even cheaper if drivers choose the annual car rental insurance policy. Besides, there’s a zero deductible, up to $45,000 in primary coverage and it covers basically any damage reason or loss as long as it occurred while driving within the rental conditions.
However, renters should know that this insurance usually acts as reimbursement insurance. Depending on the amount of the damage, you would be charged by the rental company and the insurance company would refund you those charges; unless the damage is not that pricey, in which case the car rental company would deal with this directly. Click here if you want to learn more about third-party car rental damage insurance.
Credit Cards as Rental Car Insurance Option
Relying on your credit card for insurance coverage for your rental car means that there are generally no out of pocket expenses. It is an interesting alternative when you have no other primary insurance as it provides an affordable way to cover a good portion of the rental risk.
However, credit cards are always a second source of insurance and, unfortunately, this is a fact that not many people are aware of. This means that you first need to claim on your primary auto insurance policy and risk those cons. Besides, credit cards offer very limited coverage: some don’t cover loss-of-use or tire damage and others won’t cover you over hail damage. Reading the fine print is essential here.
With so many car rental insurance options available in the market, drivers renting a vehicle on their next vacation trip should definitely evaluate the different alternatives, weigh their pros and cons and decide which one offers them the best coverage at a cost that is within your budget.
Make a wise purchase decision and… happy travels!