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What you need to know about rental car insurance

June 7th, 2016  |  Auto Insurance

There are all sorts of reasons to rent a car, even if you already own one. Whether you need a set of wheels while visiting a faraway destination, or your car is in for repairs, there’s one thing many people tend not to think much about when renting a car: the insurance.

For some, it’s a no-brainer to buy the coverage offer by the rental car company. Others see rental car insurance as an unnecessary expense. Regardless of your feelings on the matter, there’s value in understanding rental car insurance. Once you do, you can decide whether you need to pay for it or not. After all the last place you want to be making that decision is when you’re at the rental car desk standing in front of a sales rep.

What coverage do rental companies offer?

What is rental car insurance, and what protection does it provide? Much like regular car insurance, it’ll save you from having to pay out of pocket if you get into trouble.

The most common form of protection provided is called a “collision damage waiver”. This waives any and all financial responsibility in the event of a rental car being damaged or stolen while in your care. For many, this sounds like a great choice. With this coverage you won’t have to worry about paying a deductible or loss-of-use fees should the car need repairs.

Rental company coverage also includes liability, medical costs, and protection for contents of the vehicle. Getting the full amount of coverage can add up pretty quickly as the fee is applied for each day that you rent the vehicle.

Rental cars may be covered under your insurance already

If you have comprehensive and collision coverage on your Canadian car insurance policy, there’s a good chance that it will cover the cost of repairing or replacing your rental car excluding your deductible. To be sure, speak with your insurance company about rental car coverage and ask if it’s a good idea to get the collision damage waiver.

As for the other coverage, you may not need them at all if you already have car, home, and travel insurance.

Third party liability coverage is mandatory in auto insurance policies, so if you have this type of insurance, you don’t need more.

If you live in Canada, you’re probably already familiar with our public healthcare system. There’s no reason to worry about getting medical coverage if you’re staying in your home province. If you are going elsewhere, your health will be protected much more thoroughly by a travel insurance policy than by a rental car insurance policy.

Finally, home insurance policies can have “off-premises coverage”. This means you don’t need to buy more coverage to protect certain aspects of your rental car.

Credit cards could add to your coverage

Some credit cards actually come with additional coverage when used to rent a vehicle. Contact your credit card company or go over the card’s documentation to see what protection it offers. Sometimes, between your regular insurance policies and the credit card rental car insurance coverage there really is no need to buy coverage from the rental company.

When might you need rental car insurance coverage

If you don’t have an existing car insurance policy, you need to buy at least liability coverage from the rental company. Similarly, if you only have a basic policy you may want to consider purchasing the collision damage waiver. Even if you do have coverage from your auto policy, you may want to avoid paying a deductible, in which case the company insurance is good for you. Lastly, if you’re going abroad (to places beyond the United States), chances are your auto insurance policy won’t cover you, so once again, the rental company is your best bet.

For those who often rent vehicles, it’s possible to buy rental coverage from insurance companies that will let you avoid the daily charges. However, only a few people benefit from this approach.

Before you rent your vehicle make sure you call your insurance provider(s) and/or your credit card company to see how your rental vehicle is protected.

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