When you rent a car, the rental agency will usually offer to sell you insurance to cover accidents while on your trip. In most cases, you’re safe to decline it. You can get the same or better protection from your personal automobile insurance or possibly the rental-car insurance provided by the credit card that you use, and at a substantial savings. But there may be holes in your personal or credit-card coverage. If you don’t understand the rules, you could be driving your rental uninsured.

Generally, you’ll likely want to decline the coverage offered by the agency if you can. It’s incredibly expensive. For instance, a package covering collision or theft of the rental car, $1 million in bodily injury coverage if you hit someone, and relatively low amounts of property damage and medical payments coverage could, in some states, cost you from $140 to $200 or more for a one-week excursion.

In order to avoid this expense, check with your auto-insurance agent to see if your personal policy covers you when you drive a rental car. If it does, ask about any limitations of the coverage (but don’t take the agent’s word for it; double-check them in your copy of the policy). For example, there may be no collision or theft coverage if you don’t buy it for your own car as well. And rental coverage generally doesn’t extend to foreign countries. Some policies don’t cover rental cars at all, or only cover them when your car is being repaired. In addition, the coverage may only last for fifteen- to thirty days. If you have an accident in the rental car on, say, day 12 but don’t turn it back in to the agency until day 31, you won’t be covered. If you’re going to hold onto the car for a long period of time, see if the rental agency offers any special deals.

If you’re driving a rental car on company business, your company probably insures you. But ask to be sure. The company may refuse to pay if you have an accident while using the car for other-than-business purposes.

If your personal or company policy doesn’t cover your rental car, you may have another option. Certain credit cards will protect you against damage or theft for a limited number of days if you use that card to secure and pay for the rental. They may also cover any deductibles under your personal auto insurance.

But again, read the fine print because there are limitations. Visa only covers gold-card holders. MasterCard offers it on their gold card and a few standard cards. American Express usually covers all of its United States cardholders. The coverage is typically limited to standard- or smaller-size cars and minivans. If you have an accident, you’re required to follow certain procedures or risk losing your credit-card coverage. You must contact the card company (not the issuing bank, but the card company itself) using a special phone number within a limited amount of time.

Be sure to acquaint yourself with the rental-car insurance rules, both of your personal insurer and your credit card company. And check back with them from time-to-time, just in case they’ve made any changes. Stay abreast; it could save you a tremendous amount of money.

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