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Recently, I took a trip down to Raleigh, North Carolina to celebrate my grandfather’s 90th birthday.
After arriving at the party location, our gathered family began to eat dinner and share interesting and funny stories about my grandfather over the past half century or so.
During the dinner, a fairly fierce wind started to blow outside. However, our family didn’t think much of it because little to no rain was coming down.
Needless to say, we were very shocked when we strolled outside after dinner to find the tree in the picture below laying on top of my Dad’s Enterprise rental car. Apparently, the tree had been loosened by a semi-tornado that came through Raleigh a week or so before, and the wind was all that it needed to fall down nearly 30 feet on to my Dad’s car. Yikes!!!
After having a little laugh about how strange the situation was (what are the odds of having a tree fall on your car in a parking lot after all?!), I began to think about how the situation would be handled from a financial/insurance perspective because I know that my Dad is smart and never gets the rental car insurance coverage.
What Happens If Your Car Gets Damaged And You Did Not Buy The Rental Car Insurance Coverage?
Rental car companies almost annoyingly push the sale of insurance policies covering any damage incurred to rental cars while under your care. In fact, they try to push the sale of the coverage so hard that they make you feel almost reckless if you decline the coverage. Talk about tricky!
However, is this coverage really necessary?
The question to this is a resounding, “NO,” (with one exception) for two primary reasons.
Reason # 1 Why Rental Car Insurance Is Not Needed – Your Existing Car Insurance Already Covers You
That’s right folks, if you already have a comprehensive car insurance plan for your normal car, you are most likely already covered under that policy for any damage that gets inflicted to the car while under your watch-full care.
However, it is important to remember that you will still be responsible for paying your deductible on your car insurance before your full policy takes effect. This is just another important reason why you should have an adequate emergency fund.
Reason # 2 Why Rental Car Insurance Is Not Needed – Your Credit Card Covers You (if you paid for your rental car with the credit card)
A very powerful, useful, but somewhat unknown perk of many credit cards is either providing primary or secondary insurance for rental cars rented using the credit card.
If the card has primary coverage, it will pay the full cost of repair or replacement of the car, without even having to access your regular car insurance policy. If the credit card offers secondary coverage, it will pay your deductible and any replacement or repair costs not covered by your normal car insurance, but will require you to file a claim with your main car insurance.
Regardless of whether your credit card carries primary or secondary rental car insurance coverage, this is a very cool perk that is offered, and definitely one that I would recommend you follow up on.
In my Dad’s case, he called up his credit card company and found out that he has primary coverage. Because he had used his credit card to pay for the rental car, he avoided having to spend $1000 to pay for his deductible on his regular car insurance policy.
Follow up Action Item – I would recommend calling your different credit card companies and finding out which one(s) offer rental car coverage. After you find out, you can make sure to bring that card(s) with you on your next trip and pay for the rental car with it. Just make sure you smile for me when you decline the rental car insurance coverage!
The One Exception For When Rental Car Insurance Is Recommended
How about you all? Do you buy the rental car insurance coverage offered by many companies? Why or why not? Do you think it’s worth the money? Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/jefield/37133848/lightbox/