Rental-car insurance?
Standard advice when renting a car is to say “no” to the insurance, called the loss damage waiver. That’s the insurance they try so hard to sell you at the pickup counter. The reason is that you probably already have accident coverage from your regular auto-insurance policy and/or the credit card you used to rent the vehicle.
That advice is still good, but car-rental companies are increasingly adding new fees when one of their cars is damaged, according to the August issue of Money magazine. Your insurer or credit-card company might balk at covering them. They include:
- Administrative fees to process claims.
- Diminished value to reflect the lower resale value of a vehicle with an accident history.
- Loss of use to cover missed revenue while the vehicle was being repaired.
The advice to say no is still good because even if you get stuck paying for these, you’re on the hook for a relatively small portion of the damage. And, statistically, accidents are pretty rare.
This goes back to the Golden Rule of Insurance: Buy insurance to protect yourself from financial disaster, not small nuisance expenses.
And how are you supposed to pay for those unexpected nuisance expenses? An emergency fund, of course. Having a stash of cash, what they used to call a rainy day fund, is essential. That’s because it will rain. It’s just a matter of when.
