Rental Car Insurance: Are You Covered?

25 Aug

We get asked a lot – should I buy the rental company insurance? Here are some good thoughts on what might work best for you when renting a car.

I drove down to Los Angeles to visit clients a few months ago.  I chose to pay for the company’s damage waiver at $13 per day.  Someone next to me snickered.  “Sucker,” he said.  “They just sell that so they make more on the rental, you’re already covered!”

I didn’t feel like informing the good-intentioned but rude jackass that my deductible with my personal policy is $1,000. Renting the car for three days meant a $39 insurance bill.  If anything happened to the car, I’m out only that $39.

As my luck had it, the plastic grill of the car I rented was crushed by a person in LA who felt no moral obligation to let me know they had wrecked the front end of the car when they had tried to parallel park in front of it.

Had I relied on my insurance, it would have cost $1,000 to cover the deductible.  Had I paid out of pocket, it was likely $500 in damages or more.  I paid $39 and, unless my insurance company reads my blog, my premiums won’t go up for making a claim and I won’t lose any safe driver credits.

In most cases, your personal policy will extend to a rental car. Just be sure to call your carrier to confirm what your policy covers (e.g., damage, theft, liability). Be sure you understand your deductible.  Is it more than the daily damage waiver?

Is insurance coverage through your credit card an option?

You may also get some form of rental car coverage through your credit card. American Express, Discover, MasterCard, and Visa all provide car rental insurance options to members for free, as long as you charge the rental to your card. If you choose to rely on insurance from your credit card, call your company first to find out exactly what kind of coverage it provides.

When using your card for rental car insurance, keep these pointers in mind: 

  • Charge it. To get coverage, you’ll need to charge the whole rental fee to your credit card and decline any extra coverage the car rental company offers.
  • Choose the right vehicle. Trucks, off-road vehicles, and expensive, exotic, or antique cars generally aren’t covered. Other exceptions may apply, so be sure to check with your credit card company.
  • Be aware of time limits and other restrictions. Find out if there’s a cap on how long your credit card covers your rental car. Coverage may not be available in some countries, so check the company’s policy if you’re traveling abroad.

 

What kind of coverage does the rental company offer?

Typically, I’ll use the company’s coverage.  But you want to know what you’re buying when purchasing coverage through the car rental company. There are usually four main choices:

  • A damage waiver transfers financial responsibility from you to the car rental company in case of damage or theft.
  • Supplemental liability insurance protects you against claims that exceed your regular policy limits.
  • Personal effects coverage protects personal property that’s damaged or stolen from a rental car. (Your existing homeowners insurance policy may also cover these items.)
  • Personal accident insurance covers any injuries you or your passengers sustain. (Personal injury protection on your regular auto policy will also cover the rental.)

Read the Small Print of the Contract! 

Finding a balance between the cost of coverage and what you get for that price point is key to evaluating your options.

Don’t wait until you’re at the rental counter to start considering your insurance options. Call your insurance and credit card companies to find out if you’re already covered or if you should purchase insurance through the car rental company.

A little preliminary research will help ensure a smooth start to your trip—and possibly free up some funds in your vacation budget. Safe travels!

© 2014 Commonwealth Financial Network®

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