Rental car insurance has long been regarded by the travel experts as the cash cows for the car rental companies. This is also better known as collision or loss damage waiver. Rental cars don’t need insurance unlike other primary vehicles. There are some policies that extend only partial coverage to these rental cars. Even the damage waivers are not exactly comprehensive as they are filled with lots of exemptions such as exclusions for damage to property as well as high deductibles. Now, you can expect your credit card company to pick up the tab at no extra cost.
Things that rental insurance does and does not cover
In the strict sense, collision damage waiver is not insurance. Instead, they are agreements where the rental company cannot claim for damages from the customer. This normally costs about $15 to $25 per day. But it can vary from one state to another. There are some states that have made a minimum insurance mandatory and this even covers property damage, injury, or even death. The state-by-state insurance policies may be summed up in 3 numbers – maximum coverage for bodily injury, total injury coverage, and coverage for damage to property (this is in thousands).
So, California has a requirement of 15/30/5. Hence, if there are 3 people injured in the crash which causes damage to property estimated at $10,000, the rental company will have to pay $15,000 to each of the first two who file and thereby using up $30,000. The first $5,000 would go towards damage to property. The driver who is at fault will be liable to pay up another $15,000 for injury and another $5,000 for damage to property. This baseline insurance is factored in the rental costs and is provided automatically.
Normally, rental car insurance covers accidents, hail, falling trees, and theft etc. There are a number of insurance companies that offer different levels of coverage with varying costs. Most of them don’t waive off damages if another person other than the primary renter has been driving the rental car. If the driver takes unnecessary risks then the penalties and tickets will also not be covered. There are a lot of variations from one company to another.
The primary reason for purchasing rental car insurance is to try and avoid getting bombarded with huge medical costs. A credit card can alleviate this worry as the state mandated insurance can only cover up to $50,000. Since there are little chances of an accident, and keeping in mind the small amount that you will have to pay, there is no need to purchase additional insurance.
