If you have ever rented a car, you know the stress that can be involved when the person behind the counter asks, "will you be buying the insurance?"  What do you say?  You don't want to spend money for coverage you already have, but you also don't want to pay for any damages out of your pocket.  What is the right answer? With most things involving insurance - the answer is.... it depends.

Do I Need to Buy Insurance When Renting a Car?

Typically, a NH personal auto policy will extend coverage to a rental car; however, there are some important points to consider including:

• The same coverage on your personal auto policy will apply to the rental car.  If you don't have collision coverage on your own policy, you will not have it for the rental.

• Coverage is typically limited to the United States, its territories, Puerto Rico and Canada.  This means that if you rent a car anywhere outside these areas, your personal auto policy will not cover you.

• A car insurance policy defines what is considered a personal vehicle.  It does not usually include a vehicle with less than four wheels or has a gross vehicle weight greater than 10,000 pounds.  This means you do not have any coverage while say, renting a moped on The Vineyard or renting a moving truck.

As insurance professionals, we typically advise our clients to purchase some level of insurance from the car rental company.  

Reasons Why to Buy Insurance on a Rental Car

As mentioned, your NH personal auto policy will most likely extend coverage to a rental car. Still, it will not pay for the additional expenses the rental company can charge you.  These expenses can include loss of use and administration fees- which can be significant.

You can purchase a collision damage waiver (CDW) directly from the car rental agency to help avoid this risk. 

Even if you rent a car and your auto insurance company steps in to cover the claim, your credit card can be charged for damages until the claim is settled.  Depending on the complexity of the claim, this could be weeks or months, which could impact your credit.  This may be avoided if you purchase the insurance through the rental agency.

Reasons Why Not to Buy Insurance on a Rental Car

If you are confident you have met the requirements of coverage from your own auto policy, you may have coverage for loss of use and/or administration fees from your credit card company.  It is worth checking before a trip and ensuring you see this coverage in writing.

Some car insurance companies also offer coverage enhancements, at a slight fee, to cover the gaps in coverage.  This coverage can be well worth it but check with your insurance professional before renting.

To Buy or Not to Buy the Car Rental Insurance...

Unless you really like to read contracts, including your auto policy, rental agreement, and credit card benefits, and can thread those benefits together to weave a perfect little web of coverage, there is too much at risk not to be sure of coverage.

The chances of having an accident in a car you are not familiar with, and in a place you are not familiar with, seem more likely than normal.  Because of this, give yourself peace of mind and ensure you have the coverage you need while renting a car.