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The Pros and Cons of Rental Car Insurance

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By: Erica L. Pereira

With the holiday travel season arriving, it is likely that many of us will have to rent a car. When you rent a car you are faced with an important decision; whether you need to pay an additional fee to the rental company at the counter in order to get an additional insurance coverage on your rental car. By asking yourself three questions, you can determine if this expense is necessary for you.

First, determine what sort of coverage your general automotive insurance policy will apply to your rental car use. This will likely cover your liability in the case of an accident, but often this policy will not protect you from having to pay for the rental car itself, if the car is damaged or stolen. Additionally, plans vary as to the amount of coverage they provide for things like loss of use or towing charges.  Also, although your auto insurance generally carries over into the car you are driving (as long as your own car is not being driven at the same time), often renters are misinformed in believing their cars will be covered because they have full coverage on their own automobiles.

Note that the amount of insurance you have on your own car is based on the make, model and year of your current car.  Often, the automobiles that you will be renting will be new or almost new automobiles.  As such, it is likely that the coverage on your car may not cover the entire cost of the automobile, should an accident happen.

Second, determine what sort of coverage the credit card that you will use to rent the car will provide. Your credit card may cover loss or damage of the rented vehicle, but is not likely to cover personal liability for bodily injury. It may also provide coverage for towing. Additionally, there may be a notification requirement, which would require some sort of action on your part before coverage would kick in. Call the number on the back of your card to investigate the particular ins and outs of your plan.

Finally, after determining what is covered by your general insurance policy combined with your credit card coverage, look at the plans offered by the rental car company in order to fill in any gaps. In some instances, the combination of your general policy and your credit card coverage will be sufficient. However, if it is not, options such as a loss damage waiver, a collision damage waiver, or an additional liability insurance may be a good option to protect your interests. Also, separate plans may exist which cover injury to yourself or your passengers, or damage to or loss of your belongings.

As always, drive safe this holiday season, be it in your car or a rental, and make sure to protect yourself and your family in the event of an accident.

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