Know What You're Checking 'No' for the Next Time You Rent a Car

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A few years ago, a friend of mine was in a non-injury fender bender while he was on a vacation.

It put the rental car out of commission, so he arranged for alternate transportation and finished his trip. He was asking himself, "Did I need rental car insurance?" However, a quick call to his insurance company confirmed he was covered with the same terms and deductibles as if he'd been driving his own car.

No big deal, right?

That's what he thought -- until he received a bill from the rental car agency a few months later.

The agency informed him that he owed them for the time the vehicle was being repaired and not rentable. In addition, the bill included a charge for the reduced value of the vehicle due to the accident. Finally, the company charged him for the administrative costs associated with sorting out the situation.

The total was a hefty $1,500. He called his insurance company and was shocked to learn that those particular losses were not covered by his auto insurance.

Uh-oh.

However, his story had a happy ending, thanks to his credit card company. One of the benefits of his card was that it included protection that covered what his auto policy didn't. Does yours?

With the summer travel season upon us, it's a safe bet that some drivers are more focused on checking out posted gas prices than to the traffic around them. That makes now a good time to review your coverage options so a rental car accident doesn't turn your vacation into a financial nightmare.

Here's a brief summary of four major coverage options you'll be presented with the next time you rent a vehicle:

1. Loss Damage Waiver 

Normally, this coverage runs $10-$30 per day and prevents the rental car company from holding you accountable for damage to the vehicle or loss of use, towing or administrative charges. However, the rental company may still file a claim against your auto insurance that may show up on your driving record.

2. Liability 

This coverage extends the protection provided by your own policy if you are found liable in a lawsuit after an accident. The typical cost is $10-$15 per day.

3. Personal Accident Insurance 

This covers any medical and ambulance charges incurred by you or your passengers. Your auto policy might include personal injury protection (PIP), or you could be covered by your medical insurance. Typically, this runs $3-$9 per day.

4. Personal Effects Coverage 

This insurance covers your personal possessions inside the car if they are stolen or damaged. Your homeowners or renters policy also may cover this type of loss, subject to deductibles. This protection usually costs $1-$6 a day.

Put that all together, and you can see how WalletHub came up with a hefty $61/day estimate of the average cost of coverage in 2022. This summer, before you blissfully forgo the insurance when renting a car, check with your insurance carrier, credit card company and any other membership organization that might provide protection. 

Know how well you're protected before you initial any boxes that say "declined coverage."

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