Comments on: To Buy or Not To Buy Rental Car Insurance http://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/ Personal Finance Blog, Your Guide to Financial Fitness Fri, 10 Feb 2012 00:29:36 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: palhttp://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-8816 pal Fri, 29 Jan 2010 08:29:20 +0000 http://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-8816 You never need it till you need it. The math is very simple. Suppose there is a 5% chance you get into an accident, with the average accident costing you $2000 inclusive of all the hassle,the expected worth of the insurance is 0.05*2000 = $100. For a moment consider the risk of getting in an accident and not having insurance. The tangible costs are a. the interest on your credit card as the claim is processed - the rental company will max out your credit card, and then wait to adjust the claim. Which might well be over 4 weeks. Think about the interest and the wasted time. b. the loss of use charge (which is not covered by the card/personal insurance), c. administrative charges (which too are not covered). By not buying insurance, you are putting yourself at the mercy of dumb luck. As a student, I always think what would happen if I rented a vehicle which was in a collision (regardless of fault). Think about say, a broken fender on a camry...cost $3000. when you return to the counter to return the vehicle, the agent is going to look at you funny, and ask you to write down everything that happened. The next business day you will receive a call from the rental company saying they are charging you $ 5000 to fix the problem inclusive of all charges. The bill will be mailed to you in a weeks time. You are now going to have a long winded conversation with your card company/insurance agent. After 4 weeks you have payed $30 interest on the $5000 charge (@ 10% APR). In the fifth week you credit card company will settle with the rental company for a negotiated price of $3500 leaving you to pay $1500. Consider the alternative. You walk in with the damage to your vehicle, the agent looks at you funny, you say.."woops" I am sorry, I have full insurance, here is the contract, thanks..have a nice day. And, yeah, here are the keys, the tank is full..good bye. Why put yourself in a position which might get you in bad debt. Yes it is not fair that the rental costs $35 and the insurance costs $60. It is just the way it is. Yes, For a weekly rental the cost balloons to twice the size. But the risk multiples 7 times over. Consider the point, you are driving in a new city probably, the roads are not familiar to you. The chances of even a minor incident are significant. Why not pay the extra $300, and enjoy your travel in peace. I have seen similar things happen to friends, one was charged for a scratch...yeah..an arm and a leg. You never need it till you need it. The math is very simple. Suppose there is a 5% chance you get into an accident, with the average accident costing you $2000 inclusive of all the hassle,the expected worth of the insurance is 0.05*2000 = $100.
For a moment consider the risk of getting in an accident and not having insurance. The tangible costs are
a. the interest on your credit card as the claim is processed – the rental company will max out your credit card, and then wait to adjust the claim. Which might well be over 4 weeks. Think about the interest and the wasted time.
b. the loss of use charge (which is not covered by the card/personal insurance),
c. administrative charges (which too are not covered).

By not buying insurance, you are putting yourself at the mercy of dumb luck. As a student, I always think what would happen if I rented a vehicle which was in a collision (regardless of fault). Think about say, a broken fender on a camry…cost $3000. when you return to the counter to return the vehicle, the agent is going to look at you funny, and ask you to write down everything that happened. The next business day you will receive a call from the rental company saying they are charging you $ 5000 to fix the problem inclusive of all charges. The bill will be mailed to you in a weeks time. You are now going to have a long winded conversation with your card company/insurance agent. After 4 weeks you have payed $30 interest on the $5000 charge (@ 10% APR). In the fifth week you credit card company will settle with the rental company for a negotiated price of $3500 leaving you to pay $1500.

Consider the alternative. You walk in with the damage to your vehicle, the agent looks at you funny, you say..”woops” I am sorry, I have full insurance, here is the contract, thanks..have a nice day. And, yeah, here are the keys, the tank is full..good bye.
Why put yourself in a position which might get you in bad debt. Yes it is not fair that the rental costs $35 and the insurance costs $60. It is just the way it is. Yes, For a weekly rental the cost balloons to twice the size. But the risk multiples 7 times over. Consider the point, you are driving in a new city probably, the roads are not familiar to you. The chances of even a minor incident are significant. Why not pay the extra $300, and enjoy your travel in peace.
I have seen similar things happen to friends, one was charged for a scratch…yeah..an arm and a leg.

]]> By: authorhttp://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-5434 author Fri, 04 Jan 2008 03:49:47 +0000 http://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-5434 That sounds pretty shady to me. I'll try to ask a friend of mine who is an auto adjuster if they are entitled to collect loss of use from you. Rental companies have thousands of cars, I don't think one of them in the shop is taking away from their business. But, it wouldn't surprise me. That sounds pretty shady to me. I’ll try to ask a friend of mine who is an auto adjuster if they are entitled to collect loss of use from you. Rental companies have thousands of cars, I don’t think one of them in the shop is taking away from their business. But, it wouldn’t surprise me.

]]> By: Victoria Fraileyhttp://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-5422 Victoria Frailey Thu, 27 Dec 2007 22:38:23 +0000 http://www.moneycrashers.com/to-buy-or-not-to-buy-rental-car-insurance/#comment-5422 My auto insurance will cover MOST of my exposure when renting a car, but I have not found any insurance that will cover "Loss of Use", which means that if the car is involved in an accident and it takes several days or weeks to repair it, the rental car company can hold me liable for their lost revenue. That is too much risk for me, so I always purchase the rental car companies insurance. Am I too cautious? Can the rental car company truly hold me liable for that type of loss? My auto insurance will cover MOST of my exposure when renting a car, but I have not found any insurance that will cover “Loss of Use”, which means that if the car is involved in an accident and it takes several days or weeks to repair it, the rental car company can hold me liable for their lost revenue. That is too much risk for me, so I always purchase the rental car companies insurance. Am I too cautious? Can the rental car company truly hold me liable for that type of loss?

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