Should you purchase insurance for your rental car?

It's the "Would you like fries with that?" version of a rental-car counter conversation. That is, "Would you like to add the optional rental damage waiver insurance?"

Like those fries, you know you kind of want it. But should you say yes?

The answer is: It depends.

When to buy rental car insurance 

You don't have collision and comprehensive coverage on your own cars, and the credit card you used to rent the car doesn't include rental car insurance as a perk. Without it, you could be forced to pay out-of-pocket for repairs if the rental car gets damaged in an accident.

When you should consider buying rental car insurance

You do have collision and comprehensive coverage. Your PEMCO policy covers the rental the same as your own car. However, like most auto policies sold in the United States, it's limited in what it can do to pick up accident-related costs that are unique to rental cars. Those include the rental car company's administrative fees, diminished value charges or loss of use claims. (In Washington, PEMCO coverage for those fees is limited to $750; in Oregon, it's currently unavailable, although we're working to change that).

You'll want to decide if you'd be comfortable paying those potential costs on your own if the car gets damaged.

When you probably should not buy rental car insurance

You have collision and comprehensive coverage AND the credit card you used to rent the car includes coverage for those added unique-to-rental-cars company fees.

We say *probably* because there are still a couple of things to be aware of. Your PEMCO coverage can't protect anyone not listed on your policy (think a friend or relative who might share the driving). And, for your PEMCO coverage to apply to everyone listed on your policy, they must sign up as drivers on the rental agreement.

Also, rental companies aren't required to wait for your auto insurance (whether through PEMCO or your credit card company) to pay up. They can demand that you "front" the money for repairs until the matter is settled.

When it's time to call 1-800-GO-PEMCO. Anytime you'd like a review of your policy's coverage, a PEMCO Customer Service representative will be glad to help. You'll also want to call if you're renting for business, using the car for more than 28 days or planning to drive outside the United States or Canada. Special limitations may apply in those situations.

Bottom line, do what the insurance pros do. In an informal office poll, we found that many PEMCO employees opt for the rental agency's additional coverage when they rent cars. Their rationale: The added peace of mind is worth price, knowing a mishap with the rental car won't affect their vacation. Rental agency insurance means no out-of-pocket expense or travel delays after an accident. Also, drivers may not have to file a claim under their own insurance at all, provided there are no injuries and no damage to any other car or property.