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Do you need rental insurance?

Do you need rental insurance?

Most of us purchase car insurance for our own vehicle. A comprehensive policy offers peace of mind – the security of knowing you'll be covered for your own loss (minus the excess) and any loss to others, whether you are at fault or not. But do the same conditions apply to a rental car? The answer is often “no”. Here’s a guide to help you make an informed decision when buying rental car insurance.

Know what you're covered for

Car crash bumper The issue with rental car policies is that they often include a clause stating you must obey the law and follow the road rules. That may seem simple enough – you always drive in that way, right? But in an accident, it won't always be clear-cut. For instance, ‘poor observation’ is responsible for many rental car accidents. This may apply even if it can't be proven you were responsible. Picture this: You drive off at a Give Way sign as another car rounds the corner at high speed, causing you to collide. You say he was speeding and he says you failed to give way. As there's a lack of evidence the other party was speeding, the police charge you with failing to give way. This means that you may be excluded from cover under your rental car insurance policy if you crash as a result of carelessness, or you infringe one of hundreds of road rules. Some rental companies specifically exclude insurance after any traffic offence.

Check your regular policy

You may be covered under your regular insurance policy for damage to the rental vehicle. But another issue to consider is loss to the rental company while the car is repaired. They may also charge you for devaluing the resale value of the asset. So, even if your policy covers you for damage to a rental vehicle, it may not cover you for the company’s loss of revenue.

What’s the best option?

The best choice for you will depend on your circumstances and how much cover you want. Some options to look into are:

1. Take out travel insurance. If you want maximum cover, this may be your best bet. A typical seven-day policy with a $100 excess costs about $45. It provides up to half a million dollars in personal liability and covers $1000 rental excess.

2. Take out a Collision Damage Waiver (CDW). Rental car companies often offer a collision damage waiver. This is not a form of insurance, but an agreement between you and the rental company that you will not be liable for damages to the vehicle.

3. Credit card cover. Some credit card companies offer secondary cover for expenses your insurance company won’t cover.

Think carefully what agreement would best suit your circumstances before committing to any of these options. Insurance is important, but always check the Terms and Conditions with any policy, along with the price

Now learn how to save money when you rent a car.

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