Car rental insurance is at best, confusing and, at worst, a waste of your money. Are you covered by personal car insurance? How about a credit card? And if you’re covered … what’s covered? Here are some tips to navigate the fine print.
Do your pre-trip homework
This may not be the advice you want to hear, but the only way to make an informed decision about car rental insurance is to have the facts before you leave home. That means a few phone calls.
If you have auto insurance, call your agent. Likely your personal insurance covers you when you get behind the wheel of a rental car. But policies differ as to the amount of coverage, your deductible and other details, according to State Farm Insurance’s Florida spokeswoman Michal Brower. “Most auto policies cover rentals with the same type and amount of coverage on your personal vehicle,” she says.
Have your agent explain your policy carefully and in detail. Some policies are considered null and void if you violate the rental agreement – have an unauthorized driver or park the car in a bad part of town.
Even if your insurance pays for actual repairs, few policies cover loss of use and/or “administrative fees,” which rental agencies arbitrarily apply when for processing paperwork or handling other tasks after an accident.
In most cases, you don’t need liability coverage because your personal auto insurance covers you. Also, review your homeowners insurance. It may include some coverage, such as liability or property theft.
Learn the lingo
Most car rental agencies offer at least two basic products – Loss-Damage Waiver and Liability. Loss-Damage Waiver (LDW) protects the renter from all financial responsibilities for theft, vandalism, loss or damage to the car. Fees are based on the cost of the car and range from $9 to $36 a day.
Supplemental Liability Insurance protects you from lawsuits by victims of accidents. If you hit another car and someone is injured, a liability policy kicks in and deals with the claimants on your behalf. Supplemental Liability is a flat fee and ranges from $9 to $13 a day, depending on the car rental agency.
Also, you may be offered additional insurance options. For example, Hertz sells personal accident insurance and personal effects coverage. That’s a death benefit for the driver and passengers that also covers limited reimbursement for loss of personal property during rental.
Then there’s the infamous “loss of use” clause. If a vehicle is damaged while you are renting it, you are on the hook for every day the car is out of service while it is being repaired, in addition to actual repair costs.
Check credit cards
Once you have drilled down to the basics of your personal insurance, you need to contact your credit card issuer (you’ll find the customer service number on the back of the card). Visa, MasterCard, American Express and Discover all offer some car rental insurance, but it varies not just from brand to brand but card to card.
American Express will not cover a car rental of more than 30 days. Visa is usually 15 days. Depending on the card, MasterCard ranges from 15 to 31 days. Some credit cards don’t provide international coverage. For example, Visa excludes Ireland, Israel and Jamaica.
Almost without exception, a credit card provides “secondary” coverage. If you get into an accident or something happens to the rental car, your credit card issuer is going to insist you first run any claims through your personal insurance. Only then will it kick in and pick up the “extras.”
Veteran travelers like American Express’ Premium Car Rental Protection. It’s available with most AmEx cards. For an additional $24.95 (that’s per rental) you get up to $100,000 of primary coverage for damage or theft of car, up to $100,000 of accidental death or dismemberment coverage and up to $15,000 for excess medical expenses. Your car rental period is extended to 42 days.
The biggest selling point? Coverage is primary. That means if anything happens to your rental car, you don’t have to file a claim with your personal insurance company, pay any deductible or risk having your premiums increase.
No matter which credit card you have, one thing is paramount. You must use that card when renting to activate the coverage. And, if you buy the rental insurance, that negates your credit card coverage. So no double dipping.
To buy or not to buy?
So now you are at the car rental counter and the agent is asking if you want to buy insurance. And the answer is … probably not.
Usually the only time to buy at the rental agency is if your policy doesn’t cover rentals, has a high deductible or does not include collision coverage or sufficient comprehensive coverage that helps pay for loss or damage to a vehicle not caused by a collision, but vandalism, theft, hail or something along those lines. “Even if you don’t own a car and therefore don’t carry auto insurance, take your time at the rental counter,” Brower advises. “Consider the packages being offered. You may not need the most expensive plan.”
Bottom line: weigh the pros and cons. Should you rent a car and get into an accident or the car is stolen, the rental agency considers it your fault. If something happens and you opted out of rental insurance, it may reflect on your personal insurance record. And there may be the hassle factor of dealing with paperwork or your credit card company.
But, never feel pressured to buy rental car insurance. “It’s optional,” emphasizes Paula Rivera, a spokeswoman for Hertz. “You are not obligated to take any car rental optional package. And no agent should tell you otherwise.”
Five steps to proper protection
- Contact your insurance company to determine your current coverage.
- Contact your credit card issuer to learn what each card covers.
- Check car rental agency websites for optional insurance package prices.
- Use your credit card with the best coverage to pay for the rental.
- Inspect the vehicle for damage before you pull off the lot. Make sure the rental agent notes any flaws before you leave. If you have a smartphone, snap a few photos of the car for your records.
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