Standing at the rental car counter with the long line behind you, but wondering if you should purchase liability insurance on the rental car. Has this case ever happened to you?
Certainly, you may not believe what the car rental agents tell you – they work for profit. Now let me show you if liability insurance will be a wise purchase on your renal car.
You may have been told that all motor-vehicle drivers in the US (except New Hampshire) must purchase the minimum required liability insurance coverage in order to drive on public road. This kind of insurance policy protects you against the financial losses due to the bodily injury or property damage your car does to other drivers or individuals.
Without liability insurance, in the event of a traffic accident at your fault, for which you are legally responsible, you have to pay for the expenses for other persons’ losses, such as medical treatments, car replacement, or property repairs.
Given this, it is always wise to drive with adequate liability insurance, which will shield you from the lawsuits and financial ruin for an accident of your fault.
Then, is it advisable to purchase liability insurance on a rental car from the car rental company? Generally, it depends.
1. If you own a motor vehicle on which you purchased liability insurance, then the coverage, along with its deductibles, will be applied to your rental vehicle.
In case that you cause an accident with your rental car, the liability insurance on your own car will pay for the property damage or bodily injury that your car does to someone else, up to the limit of your policy.
In addition to the liability coverage, the collision and comprehensive coverages on your own car will also be likely to apply to any rental car you drive. Collision coverage covers the damages to your rental car if you are at fault in an accident, while comprehensive coverage pays for the damage to your rental car caused by theft, vandalism, fire, storms, earthquakes and other factors other than a traffic collision.
However, in such cases, do remember to check your liability insurance policy or contact your insurance agent to confirm the coverage and if it can be applied to rental cars. If you are assured that the liability coverage on your own car can extend to a rental car, you can directly decline this coverage at the rental car counter.
2. If you do not have liability insurance on your own car, it makes great sense to purchase the coverage from the car rental company. Most large rental car companies sell an array of coverages and waivers to clients, helping them reduce or even avoid the out-of-pocket expense.
Based on the type of your rental car and your destination, different levels of are available at rental companies. Meanwhile, it is quite noteworthy that liability coverage rates offered by car rental companies are higher than the average, which would be added up to a significant amount quickly since you are charged by day.
In addition to the liability coverage, there are another three typical coverages promoted by rental car companies:
• Collision Damage Waiver (CDW) / Loss Damage Waiver (LDW) – This is not an insurance product, but the waiver that takes the place of your own collision and comprehensive coverages. In the event of damage or theft, the renal car company will be responsible for the financial losses. in general, the two coverages cost you $9 to $19 per day.
But just as I mentioned above, if you have purchased collision and comprehensive coverages on your car, you can decline this coverage.
• Personal Effects Coverage – If your personal item is stolen from a rental car, this coverage pays for your loss. However, if you already have a homeowners or renters policy, you can also decline this coverage.
• Personal Accident Insurance – This covers your bodily injury in the event of a crash when you’re driving the rental car. But you can also decline this coverage if you have personal injury coverage on your own auto insurance policy or heath insurance.
When purchasing liability insurance at the rental car counter, be sure the coverage amount is sufficient – that is to say, it is better to buy higher amount as long as you can afford. Just consider the medical bills and the cost of car repairs or replacement that you might be responsible for, which would turn your life into a nightmare. Consult the car rental company about the highest limit on liability coverage that you can purchase.
Then, if you have liability coverage on your own car but think it is inadequate for the rental car, you may purchase Additional Liability Insurance (ALI) from the car rental company, which provides you with additional protection for bodily injury and property damage. Accordingly, the coverage limit will be increased to a certain amount, usually $1 million. This coverage usually costs between $7 and $14 per day, up to $15.
Do you have to purchase liability insurance from the car rental company? Maybe not! Many credit card issuers today offer rental car insurance as a complimentary perk. Even if it comes with a fee, it must be cheaper than the rate offered by the rental company.
However, most credit card rental car insurance policies do not provide liability coverage for bodily injury or death claims, while the coverage limits for property damage also vary greatly from card to card, company to company.
Therefore, if you decide to rely on the renal car insurance offered by the credit card company, be sure to verify the details of the coverage and request to have them sent to you in writing.
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