Renting a car is a great option for many. Whether you are on holidays abroad and want to have the freedom to explore the surroundings at your own pace or you’re on a business trip and need to commute without having to depend on public transportation or your car is under repair at the mechanics’ and you need to drive around the city as usual, there are various situations in which a car rental is the best and wisest alternative.
Choosing which car to rent becomes, then, a question of personal preferences and budget. The hardest part is deciding which of the car rental insurance options available in the market is the most suitable for you. In this article, we are going to discuss the advantages and disadvantages of the most common car rental insurance options.
Auto Insurance Policy with Rental Car Coverage
Those who use their auto insurance policy to cover their rental car have no out of pocket expenses. They simply need to tell the rental agent at the pickup desk that they have a car insurance that provides rental car coverage.
Most car insurance policies have a deductible that can be as high as $500-$1500 depending on the policy. This can be pretty painful if you have to make a claim! And to make things worse, your premium could increase up to 44% if it is your first claim!
Car Rental Company Collision Damage Waiver (CDW)
Buying this option gives you coverage for any damage to the rental vehicle without having to make a claim with a credit card or insurance company. You can even return the rental car as a wreck and hand the keys back and the car rental company will take it from there (provided that you were not D.U.I. at the time of the wreck).
Car rental agencies are known for charging quite a fortune for their coverage. Don’t be surprised to read up to $30-$40 per day.
Credit Cards as Coverage Against Car Rental Damage
Advantages: Just as with car insurance companies, there are generally no out of pocket expenses with credit cards when used against car rental damage. Credit car rental insurance can be an affordable way to cover a good portion of the car rental risk if you have no other primary insurance.
Disadvantages: Unfortunately, credit cards are a secondary source of insurance. That is to say that if you have a loss or an accident in your rented car you will still need to claim on your primary auto insurance policy and risk those cons. Besides, not all credit cards offer coverage against hail damage, tire damage or loss-of-use damage.
Third Party Car Rental Damage Insurance
Advantages: Car rental damage insurance provided by companies such as Bonzah.com offer various advantages. It’s much more affordable than what the rental company offers, coming in at under $10 or under a day. There is a zero deductible, up to $45,000 in primary coverage, and covers basically any damage reason or loss incurred while driving within the rental conditions.
Disadvantages: Third party car rental damage insurance generally acts as reimbursement insurance. Depending on the amount of damage, you would be charged by the rental company and the insurance company would refund you those charges. However, if the damage was inexpensive, then the rental car company would deal directly with the insurance.