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February 15, 2012

Do I need to purchase the insurance with a rental car?

The answer to this question is a very simple yes . . . and no. As with any auto insurance policy, there are two basic parts. There is a liability section covering you for injury or damage you cause and are liable for, and there is a physical damage section for damage sustained by your vehicle.

If you do not own a vehicle and have no auto insurance, you will need to purchase both the liability and physical damage coverage on any vehicle you rent. It is possible the credit card you use to rent the vehicle has some built-in coverage, but you need to check before renting to make sure the coverage included and to make sure the information on coverage is current.
For the large majority of us, purchasing the liability coverage on a rental car is almost never necessary. The liability coverage and limits afforded under your personal auto policy will extend to a rental vehicle.

Purchasing the physical damage coverage on a rental is another matter. There are several situations which will warrant that you go ahead and purchase the coverage:
1. You do not have physical damage coverage on any vehicle on your auto insurance policy. (Almost all personal auto policies will extend physical damage coverage to a rental vehicle if there is at least one vehicle on your auto policy that has physical damage coverage. You will have the same deductible (usually the highest) that is on your auto policy, and you will need to have both “other than collision” and “collision” coverage for both to apply on the rental vehicle.)
2. You are not a frequent traveler and are renting a significant distance (>1,000 miles) from your home. (Car rental companies can sometimes make it very difficult to leave the area until some guarantee of payment is made.)
3. You have 3 kids and a spouse in tow and really don’t want to deal with the hassles that can occur in the event of damage to the vehicle you are renting.

In most other situations, you are probably all right in declining the coverage. As noted above, many credit card companies provide some coverage. It is always wise to check beforehand to make certain the card you intend to use currently does that, as it is easy to miss a change in the provisions of credit card offerings. It is also wise to check with your auto agent to verify the coverage you have in place will respond in the event of damage

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