Insurance: Rental car

Most of us don't give much thought to insurance aspect of car rental until
we're offered coverage at the rental car counter. It can be a costly
mistake if there's an accident and the driver doesn't have adequate
coverage. At the same time, drivers shouldn't have to pay for insurance
that duplicates coverage on their personal auto policies or is available via
some credit cards.

The two most important types of coverage for drivers are a collision
damage waiver, sometimes called a loss damage waiver, and liability
insurance. The collision damage waiver relieves the driver of financial
responsibility if the rental car is damaged or stolen, while the liability
insurance covers costs if the driver is in an accident and is sued.
Accepting the collision damage waiver and liability coverage from a car
rental agency can add between $16 and $33 to the daily cost of the car,
according to the Insurance Information Institute.

You should check your personal insurance policies to see if you already
have coverage. In the vast majority of cases, whatever coverage you
have on your own personal auto policy is going to extend to your rental
car. But the big caveat is that the car is being rented for pleasure, not
business. So drivers who have comprehensive and collision coverage as
well as liability coverage in their personal policies can decline coverage
offered by rental car agencies. If you're not sure, call your (insurance)
agent and ask what coverage you have on a rental car.

This isn't an option for families who don't own a car or who have dropped
the comprehensive and collision coverage on an old car. In these cases,
an alternative is to use a credit card such as Visa, MasterCard or
American Express, that provides insurance protection as a benefit. The
insurance benefits can vary depending on the credit card issuer and
whether the card is basic or premium, so it is better to check the card
issuers' Web sites or call the card companies to confirm coverage.

Consumers who take advantage of these credit card-related collision
damage waivers may want to supplement it with the liability insurance
offered by the rental agencies. Rental car companies also offer other
insurance options to customers, some of which may duplicate personal
coverage. These can include personal injury insurance, which provides a
one-time payment if the driver or a passenger are maimed or killed, and
personal property insurance, which covers the theft of goods from a car.
However, most people don't need to buy either. If you have a health
insurance policy, the odds are you're covered for personal injury.
The theft of personal property often is covered in a homeowner's or
renter's insurance policy and likely isn't necessary.