Will you be traveling this year during the holidays? Maybe you will need a rental car, or perhaps due to bad weather you experience an accident and need a rental car temporarily? When you get to the rental counter they offer you rental car insurance, but do you really need it? 

If you currently have full-coverage on your vehicle you may not have to worry, talking to your agent and the rental company before picking up the rental car is your best option especially since in most cases your liability, collision and comprehensive will carry over to your rental car. There are always exceptions, so again call your agent before renting any vehicle to find out how your policy will respond to such situations. 

Since most auto insurance policies have coverage that follows the vehicle, when renting a car the coverage from your personal vehicle (if it is not in use) will transfer to the car that you are renting.

An example would be you are driving your rental car and rear-end the car in front of you. There is damage to the front end of your rental car and damage to the rear bumper of the other car. The liability insurance that transferred from your personal garaged auto will cover the property damage that you caused the other driver. It will also cover injuries sustained by the other party if you are presented with a law suit. The collision coverage on your personal garaged car will cover any repairs the rental car sustained. Remember, your deductible will come into play for collision and comprehensive coverage, thus you will be responsible for paying the deductible.  

Here is an important tip: rental car agencies will offer you either primary coverage or wavier coverage when you rent a car. 

When do you need primary coverage? When you don't own a car or when you have not purchased collision or comprehensive coverage on your primary car. In the case of not owning or insuring a primary car, you will need to purchase primary coverage from the car rental agency.

Let's assume that you do have primary coverage and that it is full coverage with comprehensive and collision deductibles of $500. You can purchase wavier coverage from the rental agency which will eliminate your owing any deductible if in an accident with the rental car. The cost of wavier damage is approximately $15-$20 per day.

A good rule of thumb to follow when determining whether or not to purchase waiver insurance is whether or not the cost out-weight the risk. When you are renting a car for a short period of time - let's say 3 days - you would have wavier charges of approximately $60, but if you were in an accident without the coverage you would owe your $500 deductible. When you are renting a car for a longer period – let’s say 3 weeks or more - the wavier charges could cost as much if not more than your deductible, in which case you might want to take your chances.  

It is important to always check with your agent first to ensure you are insured. Happy Holidays!