Whether you’re planning a trip and you’re considering renting a car to explore your destination at your leisure, your car is at the mechanic’s and you need a rental vehicle for your daily commute or because you’re going on a road trip and your own car is not comfortable or big enough, there are many reasons why you may need to consider opting for a car rental.
Whichever the reason, the agent at the office will urge you to purchase a car rental insurance policy. It’s definitely a good idea to do so as you need to be covered if an accident occurs. But the agent’s convincing talk and the urge to finish with the paperwork as soon as possible may lead you to make a rush decision that may not be the most convenient for you in terms of coverage nor the most affordable. Let’s explore the different options available in the market and their impact on your travel budget.
Car Rental Company Collision Damage Waiver (CDW)
The CDW is what the insurance policy that the rental company will offer you. It covers you and your car for any damage to the rental vehicle without having to make a claim with an insurance company or credit card. In other words, you can return the car made a total wreck and just hand in the keys and leave as long as you wrecked the car within the terms and conditions of the rental.
The down part is that rental companies are known for charging an arm and a leg for their coverage option, which can make the rental fee per day really skyrocket and the otherwise affordable rental fee can end up costing quite a fortune!
Relying on Your Auto Insurance Policy
If you already own a vehicle and your insurance policy offers car rental coverage, it has to be a good idea to use it… or not? On the positive note, you won’t incur in any out of pocket expenses; you only need to inform the agent that your own car insurance has you covered.
However, you should know as well that most auto insurance policies have a deductible that can be as high as $500 to $1500, depending on your policy, which can make it really expensive to make a pain. In addition, your premium could increase up to 44% if it is your first claim.
Third Party Car Rental Damage and Supplemental Liability Insurance
There are many independent companies that offer car rental damage insurance and they’ve become over time competitive and interesting alternatives for those renting a car and in need of car rental insurance. One of the facts that make them more attractive is that they are much more affordable than what the rental companies offer, coming in at under $10 a day or even cheaper if you purchase the annual car rental insurance policy. There’s a zero deductible, up to $45K in primary coverage and covers basically any damage reason or loss incurred while driving within the rental conditions.
In addition, drivers can purchase supplemental liability insurance online (also known as LIS or SLI) if they buy their car rental insurance policy from companies such as Bonzah. This is a convenient option as they can get both policies in only a few clicks and avoid the hard talk at the agency’s counter.
Drivers should be aware, however, that third-party car rental insurance generally acts as reimbursement insurance. This means that, depending on the amount of the damage you would be charged by the rental company and the insurance company would refund you those charges. But if the damage was not that pricey, then the rental company would deal directly with the rental agency.
Relying on Your Credit Card
If you don’t have any other primary insurance, the coverage offered by your credit card is another option available for car renters in the market. There are, in general, no out of pocket expenses and it can be an affordable way to cover a good portion of the car rental risk.
Unfortunately, credit cards always need to be considered as a secondary source of insurance: you always need to file a claim on your primary auto insurance policy and risk those cons. To make things (just a little) more painful, what’s covered by credit cards is quite limited. Some credit card companies don’t offer renters coverage for hail damage, tire damage or loss-of use.