Renting a car is a great option whether you own a vehicle or not. It makes family trips funnier and easier to explore nearby areas, businessmen on the go can move around more comfortably in an unfamiliar city and road trips with friends and family can be much more comfortable if you drive the right vehicle. And all this without having to drive your own car that may be too small, too old or too uncomfortable for travelling long distances or spending so much time on the road.
Besides, the major rental agencies are located almost everywhere in the United States and abroad and drivers’ licenses issued in the US are accepted in almost every English-speaking country without much further requirements. It’s not that difficult to find affordable rental deals or special offers so much so that opting for renting a car seems to be a perfect decision.
Whether you’re travelling to a foreign country, interstate or across states, insurance is essential to ensure a trouble-free trip. Apart from the travel insurance policy that all travellers are familiar with, there’s another one that may be quite new for those who are not used to road tripping or that don’t rent vehicles frequently: the car rental insurance policy.
Rental car insurance protects drivers from the financial risks that could occur if they get involved in an accident while driving a rental car. The policy can be obtained directly from the agency, through a third-party insurer or even from a credit card. Each of them has some pros and cons and knowing about them will make it easier for you to purchase the one that offers you the best coverage within your budget.
Car Rental Company Collision Damage Waiver (CDW)
Once you choose the car you’d like to hire and move forward with the paperwork, sooner or later he’ll mention the Collision Damage Waiver or CDW.
Purchasing this option gets you covered for any damage that the rental car may suffer and you wouldn’t need to make a claim with an insurance company or credit card. In fact, as long as you wrecked the vehicle within the terms stated in the contract with the agency, you can return the car as a wreck, hand the keys to the agent and leave.
However, tempting this may seem, you should remember that rental companies generally charge a huge amount of money for it. Fees can be around $35 per day, which is significantly higher than the daily fee for the rental.
Using Your Credit Card for Rental Car Coverage
Those relying on the coverage offered by their credit card have an affordable coverage of the car rental risk. Unfortunately, in case of an accident you can make a claim directly on the credit card. As it is a secondary source of insurance, the driver has to claim on his or her primary auto insurance policy. What makes this option even less attractive is that it offers a quite limited coverage. Tire damage, hail damage or loss of use are some of the potential hazards that generally don’t get any cover with credit card car rental insurance.
Auto Insurance Policy with Rental Coverage
If you have a car of your own, you can tell the agent at the pickup desk that you have auto insurance that covers you.
However, most auto insurance policies have a deductible which can be as high as $500-$1500 depending on the policy you have, which can be pretty painful if you have to make a claim. And all that without mentioning that your premium could increase almost 50% if it is your first claim!
Third Party Car Rental Insurance and Supplemental Liability Insurance
An increasing number of people rely on an independent third party to insure their rental car. Bonzah is one of the many companies available in the market and it offers some interesting advantages:
- It’s less pricey than the coverage offered by the rental agency. The daily fee is $10 or less. Besides, there’s up to $45,000 primary coverage, zero deductible and you get a thorough coverage.
- Drivers can purchase supplemental liability insurance (SLI or LSI) online as well.
Its major drawback is that it generally behaves as reimbursement insurance. In other words, the rental agency charges the driver, who then waits for the insurance company to refund him or her those charges. However, if a small amount of money is involved, the agency and the insurance company deal directly.
