Executive Insurance & Financial Services CEO Anthony Sce III is an experienced insurance professional with more than 20 years of experience in the industry. His company specializes in providing business insurance to manufacturers, wholesales, and distributors of all types, and serves all five boroughs of New York City, in addition to Suffolk and Nassau counties. Here, he explains whether individuals should buy the optional add-on insurance when renting a car for personal use.
Whether or not a person should purchase that extra insurance option that car rental companies offer depends mostly on which insurance carrier he already has for his regular automobile insurance.
Most automobile insurance carriers now provide the rental car coverage reimbursement for their policyholders automatically, so those people don’t necessarily need to pay for the additional coverage when they get to the rental counter.
Still, though, I highly advise these people to contact their insurance agent or company to find out for sure if they are protected before turning down any optional insurance coverage on the car they are renting.
In addition to insurance companies, lots of credit card companies and other things like that claim to offer extra car insurance protection if something should go wrong with a rental, as well. Although these extra protections do work, I still think people should check with their automobile insurance company first to see if they are already covered in that regard.
What usually happens is that people take out this optional coverage and they pay the extra fee because it seems like a small amount of money. They figure it’s worth the peace of mind since the fee is so minimal. But the reason that companies can keep these add-on insurance fees so low is because it is so rare that they need to pay out. There is such a small chance that insurance companies will have to make a payout on the optional insurance that they end up making tons of money from these types of coverage options, even though each one is only a small amount of money individually.
The general thought process for most people is, “Wow, it’s so cheap. Let me buy it just in case.” But when thousands of people each week are spending money on these optional plans when they rent cars — even if it is just $10 or $20 a pop — then it does add up for the insurance carriers and rental companies.
My best advise to consumers is this: If you already know that your regular car insurance has coverage for rental vehicles, then you should just skip the optional additional insurance that the rental agency is offering and rely on your own coverage. It is just that simple.
