On any given day, there are millions, if not billions of people who want nothing more than to separate you from the money in your wallet. Make no mistake, rental car companies are no different. While that few dollars per day might sound like a good deal, it’s possible that the coverage they’re offering could be little more than duplicate coverage of what you’ve already got.
Whether you know it or not, you may well have rental car insurance already when you use a major credit card to pay for your rental car, and you do have it so long as your auto insurance is in full effect and is paid up. How is that possible? Many major credit cards offer rental car insurance. Just check with your provider — in some cases, the coverage offered by major credit cards even extends over your deductible, so if damage to the rental car does occur, you wouldn’t have to pay a penny out of pocket. Secondly, the car insurance you already carry WILL cover you in the event of an accident in a rental car. What many insurance companies don’t really want you to know is that your auto insurance really covers you and the occupants of your vehicle, but not so much the vehicle itself. This is why you can take a new car out on a test drive without the salesperson present — your existing insurance (less the deductible) covers you while you’re driving. While it can get a bit more complicated than that when driving a vehicle owned by someone else, for our purposes, remember that you are the insured, not the car.
Like extended warranties, rental car insurance is considered a 100% profit item by rental car companies. This means that there’s no third party in many cases to underwrite the actual policy. Generally speaking, the insurance you’ll buy at the rental car counter is through the rental car company itself, and isn’t a type of collision coverage. If you get into an accident, your insurance company will be paying first up until the deductible. If you’re lucky, the rental car insurance might cover the deductible, but that’s about it. Also like extended warranties, consumer advocacy groups regularly warn against rental car insurance.
While there are always going to be cases in which rental car insurance consumers will have used rental car insurance — perhaps to cover potential vandalism (keying, tire slashing, broken glass) during a road trip, in the vast majority of cases, the additional expense will go unjustified and unused, except to bolster the bottom line of the rental car company. Remember that as long as you carry auto insurance with a deductible that you’re comfortable with, you don’t really need rental car insurance, regardless of what sort of fear marketing they throw at you.