Should I Buy Insurance Coverage from the Rental Car Company?

Don’t you always wonder about this when you’re standing at the rental car counter?  As much as you don’t want to hear it, the answer is yes.  But the reasons why are not that simple. 

Let’s start with your North Carolina auto insurance policy.  The rental car is automatically covered for liability and physical damage (assuming you have this coverage on your auto).   Sounds good so far, right?  However, you could be liable for more than damage to the car itself, or at least stuck with a big hassle defending yourself.  Here are a few reasons you should purchase the rental car company’s coverage, that aren’t covered by your insurance policy:

• Loss of rental income.   In the event a rental car is damaged and in the shop for a while being repaired, the rental car company will often try to charge the customer for the rental fees lost.  You could argue that the rental car company had other available cars to rent, and thus was not damaged, but do you really want to deal with that? 
• Loss valuation disputes.  Most rental car agreements allow the rental car company to use their discretion to determine the value of their vehicle, which could be significantly different than the actual cash value of the vehicle, which is all your insurance company will pay. 
• Immediate loss payment. The rental company may require immediate payment if their vehicle is damaged, and you likely agreed to have your credit card charged if this occurs. 
• Diminished value.  Once a car has been in an accident, it is not going to be worth what it was pre-accident.  The rental company will want to be reimbursed for this loss, but that is not covered by your auto policy.    
• Deductible.  Often the coverage purchased from the rental company does not have a deductible. Without the coverage, you would be subject to the deductible on your auto policy. 

I used to roll the dice and not purchase this coverage, but having seen so many issues arise, I do every time now.  Most businesses instruct their employees to purchase coverage when renting a car for work travel.  If you are renting a vehicle for a personal trip, I would view it as just a small piece of the overall cost of your well-deserved vacation.