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Should i get collision insurance rental car

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When it comes to paying for damage to your own vehicle, your first line of defense to recover from auto accidents is collision coverage. Many drivers are convinced they’ll never wreck their own vehicle, or that they’ll never be involved in an accident, but market research shows that the average driver in the U.S. will be involved in an accident once every ten years. Depending on your driving habits – say, if you go out late at night when drunk drivers are on the road, or if you drive and park in urban areas – you may be at higher risk. To be sure, if your vehicle is relatively new or worth more than a couple thousand dollars, you should pay to have it insured against the risk of an accident.

Three Ways Collision Coverage Serves You

Only collision coverage pays for damage you cause to your own vehicle, but contrary to popular belief, you can also use it for accidents in which you were not at fault. And really, there are three different ways collision coverage can work to your benefit if you find yourself at the wheel after an accident:

    Collision coverage pays for damage to your vehicle when YOU cause an accident.

    • If you wreck your own vehicle, your insurer will pay for the cost to repair the vehicle, or if the cost to repair is more than the value of the vehicle, they will pay to replace it based on its market value at the time of the accident.

    Collision coverage pays for damage to your vehicle when ANOTHER DRIVER causes an accident.

    • Your insurer will pay your damages and then go seek reimbursement from the other driver’s insurance.
    • Many drivers take advantage of this option when the at-fault driver’s insurer is being difficult or slow to act. You will typically have to demand your insurer take action in this scenario, but if you paid for collision coverage, you have these benefits.
    • Using this option should not raise your rates, since you were not at fault. Be sure to ask your insurance adjuster whether a scenario will or won’t affect your rates before choosing your course of action.

    Collision coverage pays for damage to your vehicle in circumstances not covered by other sections of your policy.

    • If you do not purchase comprehensive coverage for vandalism, acts of nature, theft, etc., then you can typically claim such losses under collision coverage.
    • For hit-and-run accidents or damage caused by a driver with no insurance, you can typically claim such losses under collision coverage.
    • Using collision coverage in these scenarios may raise your rates, as your insurer may assess such damage as if you were at fault or caused it yourself. This is why it’s best to carry comprehensive (COMP) and underinsured motorist (UIM) to pay for damage in any scenario.

Adding collision insurance coverage to your auto policy will of course increase the cost of your monthly premium, however the amount of increase will vary greatly from driver to driver, depending on several factors. According to the Insurance Information Institute, certain factors affect the cost of a driver’s insurance premiums. Such factors include level of education, income, age, gender, credit score, driving habits, driving history, geographical location, and the vehicle you drive. Gathering quotes from multiple insurers is the best way to know what your premiums will cost and where you might get the best deal; just make sure you’re comparing equal coverage and policy limits when getting quotes from different insurers.

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Most insurers will offer slight discounts to drivers who buy multiple forms of coverage at once, such as comprehensive, underinsured motorist, rental, and personal injury protection on their auto policy. Additional discounts may be offered for those who buy homeowners, motorcycle, boat, RV, or other forms of insurance coverage from the same insurer. Generally speaking, these can be qualified as “spend more to save more” discounts; drivers on a budget shouldn’t consider buying extra coverage as a means to save money. On the other hand, going without insurance coverage (specifically collision) will likely leave you with a large out of pocket expense in the event you wreck your vehicle.

Beyond the aforementioned benefits of collision coverage, there are a handful of very important factors to keep in mind when considering when to drop collision insurance coverage, or when collision insurance is worth it for your car.

Factors to Consider When Choosing Whether or Not to Pay For Collision Coverage

  • Your Vehicle’s Value
    • If you drive a vehicle that’s only worth a few thousand dollars or less, it might make sense to pay for any accident damage out of pocket instead of paying your insurer.
    • For expensive vehicles with values over $5,000 or $10,000, it’s a good idea to pay for collision coverage.
    • If you have a loan on your vehicle, many lenders will require you have collision coverage on your auto policy. However, some states and some lenders don’t always require collision coverage. Without collision insurance, in the event you damage or total the vehicle, you’ll be left paying the full value of a loan with no way to recoup much of the money from the vehicle, which, in its damaged state, is worth a fraction of its pre-accident value.
    • Over the course of four or five years (or less), you might end up paying your insurer more than your vehicle’s value.
  • Depreciation In Value of Your Vehicle Over Time
    • If your vehicle is worth roughly $10,000 today, you can expect that in five years it might be worth anywhere from $7,000 to $3,000, or less. You might consider dropping collision coverage in a few years if you can expect your vehicle won’t be worth more than a few thousand in that time.
  • Your Risk of An Accident
    • If you only drive your vehicle infrequently or driver fewer than a few thousand miles per year, your risk of an accident may be relatively low.
    • If you drive everyday, and if you drive and park in urban areas, you may be at higher risk of an accident.

You can do some basic math as to whether collision coverage is financially viable by following these steps:

  • Research your vehicle’s current value by searching for comparable models on craigslist, ebay motors, autotrader.com, kbb.com, nada.com, or other websites for shopping for vehicles.
  • Calculate your current rates for collision coverage or get quotes for collision coverage to know what your expected yearly premium will be.
  • If, over the course of three to five years, the total of your yearly premiums will equal or exceed your vehicle’s value, you should consider cancelling your collision coverage.
  • Instead of paying your insurer on a monthly basis for collision coverage, you should instead set aside a similar amount for an emergency vehicle fund, which you can use for emergency repairs or for maintenance.

If you have enough money in your savings account to pay for your vehicle’s value at a moment’s notice, you should consider dropping collision coverage and reap the savings while you drive without an accident. In the event you cause damage to your own car, just know that you’ve worked it into your budget to pay for it. If the damage is minimal or simply cosmetic, and your vehicle has a relatively low value, it may be worth it to simply live with the damage instead of making costly repairs.

At the end of the day, many factors should weigh into your decision as to whether to keep collision coverage on your policy or not. If you’re not absolutely sure that you could deal with paying for repairs or completely replacing your vehicle at a moment’s notice, or else going without a vehicle until you could save for a replacement, it’s best to err on the side of caution and pay the extra premium for collision coverage.

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Yesterday I paid $19.99 plus tax for insurance when I rented a car as I have no personal car insurance. Crazy me, I now believe. I hold a TD Visa Infinite First Class card - not a premium card. Any thoughts? -- B., Toronto

That 20 bucks a day is probably cheaper than replacing a totalled Chevy Spark. But before you get the collision damage waiver, check to see what's already covered by your credit card and your car insurance.

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"Do you homework, find out where you have the most coverage," says Anne Marie Thomas, business development manager at Insurancehotline.com. "Your credit card might cover damage to the automobile but it will not cover liability."

Your credit card might automatically give you coverage, as long as you used it to pay for the car rental. If your card doesn't, they might let you buy additional coverage for an annual fee. We checked with TD: your card will protect you against "loss arising from damage to the rental car of most rentals in North America and many foreign countries."

Look at the fine print in your credit card agreement, Thomas says.

"There might be a limit on what they'll cover," she says. "If it's $50,000, that may not cover the car you rented."

And, certain types of rental vehicles, such as cargo vans, may not be covered.

If you already have car insurance

If you do have car insurance, check that it covers damage to a rental vehicle. And, again, see how much damage it covers.

"It's optional so you have to purchase it from your insurance company," Thomas says.

In Ontario, you have to buy an OPCF 27 waiver, which covers damage to a car you don't own. It's only valid in Canada and the U.S., so if you're driving somewhere else, you'll need to buy extra insurance.

Third party liability

Third-party liability covers damage to others and their property.

Check with the rental company to see what they offer. Thomas says it's typically at least $1-million.

"The liability usually stays with the vehicle," she says.


Distracted driving cop out?

Why do police get to talk on the phone and use laptops while they're driving? It's not fair to the rest of us. -- Michael

Well, the rest of us don't to carry guns or fight crime either, says Drop it and Drive's Karen Bowman.

"This question comes up all the time," Bowman says, "Police need to do their job and that means they have to make calls and use their laptops."

If police had to pull over to make calls, it could mean they wouldn't make it to an emergency call in time.

"If I've called 911 because somebody's in my house, I don't want police to take an extra two minutes to get there," Bowman says.

That said, everybody has to focus on the road when behind the wheel, says OPP spokesman Pierre Chamberland.

"That includes police officers," Chamberland says. "It includes me in my normal life – we all have to get better at this."

If you have questions about driving or car maintenance, please contact our experts at globedrive@globeandmail.com.

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Renting a car is expensive, so many people are tempted to skip the optional rental car insurance. That can be a risky decision, however. When you're wondering, "Should I get rental car insurance?" here are three questions to consider.

Should I buy rental car insurance if I already have a good car insurance policy?

Yes. If you get in a car accident - which may be more likely when you're driving unfamiliar roads in a rental car - your insurance company could slap a 20 percent (or more) surcharge on your policy premium for the next three years.1 Rental car insurance can protect you from this spike in your insurance premiums.

Rental car insurance may also protect you from fees for "loss of use." Loss of use" is something rental car companies claim when their car is in the shop after an accident. They're losing out on rental fees on that car, so they want you to pay for their financial loss. In many states, rental car insurance policies don't cover loss of use,2 but Allianz Global Assistance's Rental Car Damage Protector does.

Should I buy rental car insurance if I'm traveling internationally?

Yes. Driving in foreign countries can be risky - check out our article on some of the most dangerous destinations for drivers - and having a good rental car insurance plan will protect you in case of collision or theft. Also, some countries require higher insurance limits than your everyday car insurance policy provides. Read your plan documents carefully, however. Allianz Global Assistance rental car insurance, for instance, does not cover cars driven in Israel, Jamaica, the Republic of Ireland, Northern Ireland and jurisdictions where the law doesn't allow this coverage.

Should I get rental car insurance if I'm planning an RV trip?

No. Rental car insurance doesn't always cover every type of vehicle. Common exclusions include trucks, campers, trailers, motorcycles and luxury cars.3 If you're planning to rent an RV for a cross-country trip or a Lamborghini for a driving tour of Italy, a typical rental car insurance plan won't cover you.

Ready to hit the road? Don't forget to purchase the Rental Car Damage Protector from Allianz Global Assistance. It's an affordable plan that includes up to $40,000 in collision/loss damage insurance, plus 24-hour hotline assistance.

Learn more about rental car insurance so that you can make an informed decision as to whether or not to purchase Rental Car Damage Protector from Allianz Global Assistance.


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