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Kiplinger’s Personal Finance

Kiplinger's Personal Finance:The ins and outs of car rental insurance

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If you’re renting a car, having insurance is important.

Insurance is essential if you’re renting a vehicle.

Damage the rental car and you will be responsible for its repair or replacement, plus damage and injuries if you hit another vehicle.

You’re likely to get the hard sell on the rental agency’s own insurance coverages — the CDW (collision damage waiver) and extra liability insurance.

“Rental car agents are very much graded based on the number of add-ons that they sell, so they have a financial incentive to sell you their rental car insurance regardless of whether you’re already covered,” said Jonathan Weinberg, founder of AutoSlash. It’s expensive, and you may not need it.

Your car insurance policy likely covers damage to rental cars and other property damaged in an accident, as well as liability protection for you and anyone else who gets hurt.

However, you’d be responsible for the deductible, and making a claim could cause your insurer to raise your rates.

The credit card that you use to pay for your rental car may provide collision damage coverage (for theft or damage to the rental car), but most credit cards don’t provide liability coverage (for damage you cause to other cars and other people), said Maia Sutton, a spokeswoman at Insurify, a car insurance comparison website.

Your credit card’s coverage also is secondary to your primary policy — your insurance company would pay first, up to the policy limits, and the card would cover certain gaps, such as your deductible.

If you do damage the rental car, you don’t want to be on the hook for the daily income that the rental company loses while the car is being repaired.

So make sure you have loss-of-use coverage, said Penny Gusner, with

You also want diminished-value insurance to pay for the difference in resale value for a car before and after an accident, which could run thousands of dollars.

Oftentimes, your own auto policy and credit card won’t cover these fees. So for peace of mind, you may want to get the rental company’s CDW insurance policy. That covers damage to the car, loss of use and diminished value.

Some renters prefer to buy the CDW for convenience or to avoid having to make a claim with their own insurer in case of an accident. CDWs typically cost $10 to $30 per day for economy vehicles and more for larger vehicles and SUVs.

If you use an aggregator such as Hotwire or Priceline, you often have the option to buy third-party coverage, which is typically less expensive than what the rental car company offers. But you’ll have to go through some red tape to make a claim.

Make sure to take pictures or video of the vehicle when you pick it up and when you return it, just in case the car rental company tries to send you a bill for damage later on.

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