Auto Insurance

Is it necessary to buy insurance on a rental car?

Q: I plan on doing a lot of traveling this summer, which will include renting a car. Should I buy the collision damage waiver, which covers theft or damage to the vehicle?

A: That usually depends on your regular auto insurance policy - and how you decide to pay for your rental.

``Whatever coverage you have on your own car, in most cases, applies when you rent a car,'' says Jeanne Salvatore, spokeswoman for the Insurance Information Institute in New York.

However, she notes that some insurance companies don't extend regular policy coverage to business rentals.

If you're paying for your car rental on a credit card, there's also a good chance that insurance coverage is provided. However, in most cases, it only applies after your primary policy, and its deductible, have been tapped.

There are other caveats.

If you have an older car and don't carry comprehensive and collision coverage, you may want to opt for that coverage from the rental company, or risk being liable for a huge bill if the rental car is damaged or stolen, Salvatore says.

She also notes that the rental car company may waive coverage if you were speeding, driving off-road or driving under the influence of drugs or alcohol when the damage to the car occurred.

Salvatore recommends contacting both your insurance agent and credit card company to see what's covered.

``Don't assume you have a lot of coverage and don't assume you have none,'' she says.

``When in doubt, take the coverage, if you haven't bothered to check all this. It is expensive, but it's not worth the risk that if you get into a really horrific accident, you could be sued for hundreds of thousands of dollars.''

The two most important forms of insurance are liability and collision.

Liability insurance generally costs $7 to $9 per day for up to $1 million coverage, according to the Insurance Information Institute. Collision damage runs between $9 and $19 per day.

If you're looking to save money, Salvatore says, consider waiving coverage for personal effects that might be stolen from or with the car. Those items typically are covered under a homeowner's or renter' s policy anyway, she notes. Such coverage usually runs $1.25 a day on a rental car.

Also, personal injury protection insurance, which would cover accident-related medical expenses for you and your passengers, can be waived if you have that coverage through your regular auto insurance policy, or even your regular healthcare plan, she says. This type of insurance typically costs $3 per day.

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