There are currently more than 35 million cars registered across Canada. These play a vital role in everyday Canadian life. They help you to get to work and school, travel to see loved ones, explore the country and run daily errands.
However, not everyone in Canada owns their own vehicle — some people rent theirs instead. In fact, there are currently more than 2,800 car rental companies operating across Canada. These rent thousands of cars out to people living in or visiting Canada.
Renting a car offers you all the benefits of driving of a vehicle without having to commit to mechanically and financially maintaining it. This is a great idea if you only need a car some of the time. That said, you still have a responsibility to look after a rental vehicle while it is in your possession.
You will be held responsible for anything that happens to a rental car while you are using it. This is why rental car insurance is popular among drivers.
So, what is rental car insurance, and do you need to get it? Read on to find out more.
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What is Rental Car Insurance?
When you drive a car on Canadian roads, it is essential that you have insurance. This is a legal requirement in all Canadian provinces.
Depending on your insurance coverage, this protects you, your vehicle, and any damage that might cause while on the road. If you do get into an accident or damage your vehicle, your insurance will cover most of the costs involved.
You can sign up for rental car insurance when you hire a vehicle and pay for this at the same time as the rental fee. Most policies are short-term so that you can tailor them to the length of your rental period. As with standard car insurance policies, you may have to pay an excess on any damage before your insurance kicks in.
Most rental companies will require a minimum insurance coverage when you hire a vehicle with them. However, often this won't provide large amounts of coverage. As a result, if you are in an accident, you'll still end up paying a hefty bill.
This is why it's a good idea to look for more comprehensive coverage before you start using your rental vehicle. It's also a good idea to check whether or not you already have rental car insurance in place from your auto insurer or credit card company.
Different Types of Rental Car Insurance
There are several different types of rental car insurance coverage to look at. Some of these will be included in a basic policy, while you may have to add others to your coverage.
Normally, a rental agency or insurer will arrange its coverage into four areas. Let's take a closer look at these.
Personal Effects Coverage
Personal effects coverage takes care of your belongings within the vehicle so protects you against thefts. You may already have personal effects coverage in your homeowners' insurance. So it's worth checking this before you sign up for it.
Liability insurance is a must-have for all drivers but often rental companies only offer the bare minimum in their contracts. Before you accept a policy, you may want to increase your liability insurance to avoid hefty bills after an accident.
This type of insurance protects you if you cause damage to other vehicles, road users, or property while driving. If someone tries to sue you after an accident, for example, your liability insurance will absorb most of the cost of this.
Collision and Loss Damage Waiver
A loss damage waiver essentially is a way of relieving you of financial responsibility if your rental car gets stolen or damaged while you are using it.
Some waivers also provide clauses for the "loss of use" of a vehicle. If a car needs repairing after you have used it then you could face hefty fees for admin and loss of income. Signing a loss of use waiver protects you from these fees.
Personal Accident Insurance
Each year in Canada, more than 140,000 people are killed or injured in accidents while on the road. This is why personal accident insurance is so important.
This type of insurance covers you for the personal costs incurred if you are in an accident. If you have to take an ambulance to the hospital or need medical attention, for example, your personal accident insurance will cover this.
Before you buy this, it's a good idea to check whether or not you already have coverage. This may already be included in your personal injury protection, health insurance, or auto insurance cover.
How to Purchase Car Rental Insurance
If you are planning to rent a car and need insurance for it, there are a number of ways that you can do this. It's a good idea to compare different policies and their prices to make sure that you get a good deal.
Getting Insurance Through Your Credit Card
A lot of major credit card companies, such as Visa, Mastercard and American Express, offer a certain degree of car rental insurance coverage. The amount of coverage that they offer depends a little on the institution you deal with.
You can find out how much coverage you have by calling the number on the back of your credit card. If you are already covered for rental vehicles then this could save you a lot of money!
Buying From the Rental Company
All car rental companies will offer you insurance when you hire your car. They can do this when you first book it or when you go in to collect the car.
They will then add the price of your insurance to the hire cost so that you pay your whole bill in one go. This is very convenient but it can be a more expensive way to get your insurance.
Using Your Own Auto Insurance
If you already have an auto insurance policy in place, then this may provide rental insurance coverage. If not, you can speak to your provider about extending coverage while you hire a car.
This is a good idea if you already own a car and are hiring one while on holiday or travelling with work.
When Is It Safe to Decline Rental Car Insurance?
Auto insurance is mandatory throughout Canada, so declining it isn't really an option. That said, the amount of rental coverage that you legally need depends on a number of factors.
First and foremost, it is worth looking at the coverage that you already have. Some personal auto insurance policies extend to rental cars as well. In that case, you may be safe declining additional insurance from your rental company.
The amount of coverage that you legally need also depends a little on where you are driving. This is because different provinces have different laws about the amount of mandatory insurance required.
That said, you don't just have to buy insurance based on the legal requirements. What you really need is insurance that will cover you for damages that you couldn't (or wouldn't want to) afford on your own.
How to Save Money on Car Rental Insurance
If you're hiring a car then you should always invest in rental insurance. After all, you cannot control what other drivers on the road are going to do. Being involved in an accident could cost you dearly.
One of the things that puts people off getting car rental insurance is the additional cost. Fortunately, there are plenty of things you can do to save money on your insurance.
Don't Rent Directly From the Airport
You'll often find car rental companies at the train station or airport. While these are conveniently located, they are often more expensive.
Limited options mean that rental companies at the airport can charge higher prices and additional fees. Planning ahead will save you some serious money.
Go Online to Find Deals
Speaking of planning ahead, go online to find the best possible deals for your rental car insurance. This is a great place to look for deals quickly and to find coupons and discount codes.
Avoid Prepaying Too Early On
A lot of rental companies will offer very cheap deals to people who are willing to prepay for their car hire and insurance way in advance. However, you should think carefully about this before signing up.
Prepaid offers are often extremely inflexible, so if your plans change that's money down the drain. Before signing up, make sure that the read all of the terms and conditions on a prepaid deal.
Shop Around for Quotes
If you're looking for a good deal then shopping around is key. Most companies will offer quotes for car rental and insurance for free, so don't be afraid to ask for these!
When comparing deals, make sure that you look at cost and the amount of coverage you get. A deal that is way cheaper may offer less comprehensive insurance coverage.
Common Rental Car Insurance Mistakes
Before you organize your car rental insurance, make sure that you keep an eye out for some key car rental insurance mistakes. These could leave you without enough coverage or mean that you end up paying far more than you should!
1. Renting a Non-Insurance Friendly Car
When you are on vacation or using a car for a short period of time, it can be tempting to go for something flashy. However, these cars will always be much more expensive to insure.
So make sure you look for a vehicle that has everything you need without costing the earth. This will save you a lot on your insurance.
2. Accepting the Basic Insurance Coverage
As we've already mentioned, a lot of rental companies will offer basic liability insurance on their vehicles. But this won't help you much financially if you are in a serious accident.
It's important to check your policy thoroughly to make sure you're getting the coverage that you need, which leads us to our next point.
3. Not Checking the Coverage You're Getting
At the other end of the insurance spectrum, some rental companies will try to sell you expensive and unnecessary insurance policies. Checking what is included and asking to remove unnecessary policies can help you secure a better deal.
For example, if you are using your car in the summer during a dry spell, you're very unlikely to need water or flood insurance!
If you already have some insurance policies on the go then you may also already have a certain amount of coverage. It is worth checking what your home, auto, or renters insurance already cover to make sure that you don't end up paying for the same coverage twice!
4. Forgetting About the 24-Hour Clock
Often rental companies use a 24-hour clock to hire out their vehicles but insurance companies charge per day. This means if you hire a car from 9 am on the 10th of January, to 9 am on the 13th of January, you'll only get to use your car for three full days.
However, you will have to pay for insurance for four days — so make sure you don't get caught out by this. Dropping your car off early could save you an extra day's worth of insurance costs.
5. Ignoring Cancellation Fees
All rental insurance policies will offer you the option to opt-out of your contract at any point. However, some will charge a steep cancellation fee for this. You can give yourself more freedom by choosing a policy that doesn't come with a cancellation fee.
Don't Get Caught Without Rental Car Insurance
As you can see, if you are planning to hire out a vehicle it is vital that you invest in rental car insurance. This will protect you against any damage that you cause or suffer from while you are on the road. It could save you a lot of money if you do end up in an accident.
So what are you waiting for? Find out more about your options for auto insurance today. We're happy to help!