The one question our clients most frequently ask is whether they should purchase additional insurance from the rental company when renting a car.

Our recommendation is a resounding yes for the physical damage or loss damage waiver. Admittedly this isn’t always a welcome response as it typically costs an extra $20 – $40 a day for this coverage.

Why do we recommend purchasing this additional coverage?

While your own insurance policy will respond covering a rental car the same as your own vehicle (within the U.S. and Canada) – buried in the fine print of most rental contracts are potential additional charges your insurance policy would not cover, such as:

  • Loss Of Rents – A charge for the daily rental fee for each and every day a rental car is out of service following an accident.
  • Diminished Value – A rental company may decide, after your insurance has already paid to fix their vehicle, they don’t want a previously wrecked vehicle in their fleet. If they end up selling the car for less than the blue book value this provision allows them to hold you responsible for the difference in value.
  • Towing – Even if you have towing coverage charges may exceed your coverage limit, especially if the rental company requires the car to be towed to a particular facility rather than a nearby body shop.
  • Administrative Expenses – We have even seen a rental company add a $175 “administrative expense” charge for paperwork that amounted to simply passing an estimate for repair costs from a body shop to an insurance company.

While the cost of additional insurance when renting a car is definitely in the column of being a nuisance expense it can save you considerably if you happen to have an accident.

Did you know?
If you rent a vehicle, even if your insurance covers repair costs resulting from an accident, the rental company may put a hold on your credit card for the amount of repairs until they receive payment!

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