Many companies scare clients into buying additional auto insurance when renting a car. But experts tell consumers who are travelling this Holiday Season that additional coverage may not be necessary.
In Minnesota, a person would have to spend $10 to $15 on car rental insurance each day in order to meet the state’s minimum coverage of $35,000. But that amount is only enough to cover the vehicle they are driving. If they do end up wrecking another car, $35,000 most likely would not be enough.
According to a 2007 study by the National Association of Insurance Commissioners (NAIC), 42 percent of the 632 consumers surveyed said they are thoroughly confused about the idea, forcing 34 percent of them to purchase car rental insurance just to make sure that they were covered. Former Alabama Commissioner Walter Bell says many consumers purchase unnecessary coverage when renting a car and end up wasting money.
NAIC tells consumers that most policies already protect a driver against theft or damages to a rental vehicle. Policyholders may even file for a claim if they have damaged a rental car outside the United States. One Ashville, NC motorist for instance, reported that he was not able to file a claim when he scraped the sedan he was driving in Ireland. He reasoned that he was unaware that his personal auto insurance policy would have covered most of the damages he caused.
Industry specialists explained that rental companies scare consumers because sales of insurance and damage waivers, which absolve motorists involved in an accident, are important profit centers for them.
But car rental companies maintain that additional coverage is necessary in helping consumers maintain good standing with their provider, explaining that personal premium rates could go up with every claim made.
So they can avoid spending money unnecessarily, NAIC advises Holiday goers to ask their insurance agent if their personal policy covers a rental vehicle. If the policy does not provide car rental coverage, consumers are advised to inquire regarding the cost of an additional coverage. NAIC says it might be best to purchase non-owner auto insurance policy instead, which provides benefits other than car rental coverage. Specialists add that a non-owner auto liability insurance policy usually provides comprehensive coverage at lower costs. It can be purchased for $200 to $500 a year. Experts say this is the better option for frequent travelers, instead of paying $7 to $14 a day for car rental coverage.
Consumers who are concerned that a company is giving them bad or misleading information regarding additional coverage are advised to check with their state’s insurance department.