Should you buy insurance when you rent a car?

One of our frequently asked questions concerns the rental of cars when people go on a vacation. The question is, “Should I buy the collision coverage offered by the car rental company for $22 to $30 per day?” The answer is no, if your automobile is insured in Rhode Island.

Under Rhode Island auto policies, coverage for a car rental is automatically covered by the liability portion of your policy when there is a signed, written contract.

The rental contract calls for you to return the automobile in the same condition that it was in when you received it. If there is any damage to it, you would be covered under your liability policy. In addition, the rental company would also charge you for the loss of rental income while the car is being repaired and also the diminution in value because of the damage. All these items would be covered under your liability policy if your limits are high enough to cover the entire loss.

A word of caution: When you report that the vehicle has been damaged or stolen, the rental companies will usually immediately charge your credit card for the value of the car until your insurance company settles the claim. You should always give the rental company a card with a low limit, and keep the high limit card to pay for your vacation.