Rental Car Insurance – Should You Buy Rental Car Insurance?

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Your flight arrived one hour late. Now you will be late for the important meeting. Your customers are sitting at a conference table, waiting impatiently. You are now at the front of the queue at the car rental counter. Six other frustrated businessmen follow you, who are also late for their meetings. The agent lays the contract in front of you and marks all areas that you need to sign or initial. As if to tell you, she looks at you. The print is very small. Legalese is used to write the sentences. Although you would like to read all the fine print, you can sense the people around you becoming more upset. You thought that you could rent a car for $35.00 per night. You now pay $70.00 per day for all the add-ons.

Oh…the pressure…the panic! You sign and leave your initials all over the place. You get your keys and contract, and then you drive to your car, feeling inwardly mad that you didn’t stand up for your rights.

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The good news is that the story you just read may be familiar.

You will likely be offered these options at the car rental counter, no matter if your car is rented regularly or if you are just a frequent traveler who requires a car. Some people will decline to rent everything. Some people purchase all the coverage.

Are you spending too much on unnecessary coverage, or are you leaving yourself uninsured? I recommend you call your auto insurance company as well as the credit card company to rent the car before you go. It is necessary to determine if your rental car has automatic coverage from each company. Also, the conditions and terms of that coverage.

FIRST…CALL YOUR AUTO INSURANCE COMPANY

There is coverage for auto damage in your business and personal auto policies. Insuring agreements in most policies say that we will cover for accidental and direct loss to your auto or any non-owned auto. This includes their equipment.

Another expression is VERY IMPORTANT!

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“If a non-owned auto is damaged or lost, we will cover it as wide as possible in the Declarations. This is an example of how it would work for you.

Two vehicles are available to you. The first is a 2006 Toyota Camry, which has full coverage. It is valued at $24,000 You only have liability coverage for the pickup and the 1980 Chevy S-10 pickup is worth $1,500. Your insurance company would cover the rental car if it was damaged. This is the most comprehensive coverage you have.

If your car is older and has only liability coverage, you will not have any property damage insurance for the rental car. In such cases, you can use your credit card’s Collision Damage Waiver to purchase the CDW at the car rental company.

Ask your agent at your insurance company about the coverage that you have for your vehicle. Ask your insurance representative if there are limits on your Collision coverage. If there’s a limit on your Collision coverage, for example, if you have a Ford Taurus 7-year-old that’s valued at $5,500, and you rent a Cadillac Escalade worth $55,000, will your personal auto insurance pay for the damage to the more valuable vehicle? This is a very important fact to remember. If you are not properly covered, you could owe the rental company thousands of dollars to repair or replace a high-value rental vehicle.

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Learn the limits of liability. Make sure that your limits are higher than the minimum limits required by your state. The most affordable limits are $100,000 per person/$300,000.00 per accident for Bodily Injuries, and $100,000 for Property Damage. Limits should not be lower than this amount. Higher limits would be more advantageous.

Learn about the collision and comprehensive deductibles that you have for your car. because those deductibles will apply when you rent a car and use your own insurance for rental coverage.

Make sure you have both Uninsured motorist and Underinsured motorist coverage on your personal policy or business policy. If you are in an accident with an uninsured motorist, and the accident is his fault, recovery will be practically impossible. The same applies for motorists who are not insured. You are best to get your own coverage.

Q: What if my car isn’t insured?

A: If you do not own a car, you won’t have an automobile policy. Both the liability coverage and the CDW should be purchased with the rental car coverage. You could also use the CDW on your credit card and purchase the optional liability coverage through the rental company. However, if you rent a lot of cars, you can still purchase a “nonowner” liability insurance policy. This could be a cheaper option than the coverage provided by car rental companies.

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Q: What happens if I lose or damage my car’s personal property?

A: Most Collision Damage Waivers provide coverage for theft of the vehicle, but not any personal property stolen or damaged inside the vehicle. You may be eligible for coverage under your renter’s or homeowners insurance policies for any stolen or damaged personal property. You will most likely need to pay a deductible.

Here’s an important tip. Some people think that, if they purchased the Collision Damage Waiver or used the CDW from their credit card, and the rental car got damaged, they don’t have to report it to their own insurance company. They think that since the CDW covers the damage, their own insurance policy …. will not be affected and they won’t see a rise in their rates. WRONG!!! You can’t get away with not informing your insurance company about your accident. There are many things that can be damaged in an accident other than the car. Even if you only run into a guardrail in your accident, the guardrail owner will look to you for compensation. Other people may have been hurt. There could be a lot of liability and you may need your auto policy for business or personal reasons. You have legal representation in the event that someone files a suit against you.

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If you don’t intend to use your business or personal auto coverage, you can decline the Collision Damage waiver on the car rental agreement.

Next…CALL THE CARD COMPANY

Ask your credit card company about their benefits. Every company is unique, and every level of credit is unique. A regular card could have different insurance benefits from a gold or platinum card. Ask your card company to mail you the benefits in writing. You can also ask the card company to fax or email your benefits if you need it quickly.

Some cards only cover collision and comprehensive and may not provide coverage for liability. Certain cards offer only coverage if you rent from a specific rental company. Some cards limit the duration of coverage. Certain cards do not automatically cover you, and you will need to sign up in order to be covered. Others limit the vehicles that you can rent. You can find some exceptions below.

Call each credit card to find the one that offers the most benefits. You can then use the credit card to rent a car and get their benefits.

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If you do not intend to use the credit company’s coverage, the Collision Damage Waiver must be declined in the rental car agreement. The credit card company’s coverage is likely to exceed that of the rental car company’s Collision damage waiver. “Excess” is when any other coverage would pay first, while the credit card coverage would then pay any remaining loss.

Credit card Collision Damage Waivers cover:

vehicle damage
Theft
Loss of use
Towing

Check out the CDW written by your credit card company for more details.

Collision Damage Waivers exclude:

Injuries to others or damage to property within or outside the vehicle rental.

Theft or loss of personal property.

Liability

Loss due to involuntary acts such as DUI, drug use, or any other illegal activity.

Off-road operations. No coverage if you rent an SUV to drive off-road.

Rent periods exceeding 15 days in your country of residence or 31 days in a country abroad.

Vehicles that are not covered vehicles, such as:

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Exotic, antique and expensive vehicles

– certain vans

Pickup trucks

Other trucks

Motorcycles and ATVs

Check out the CDW written by your credit card company for more details.

CAR RENTAL INSURED

These four coverages are offered by most major rental car companies.

o Collision Damage Waiver (CDW). This protects a rental car that has been damaged in an accident, vandalism or theft. Prices range from $9 to $20 per day.

The Collision Damage Waiver (sometimes called the “Auto Rental CDW”) is one of the most confusing parts of car rental coverage.

The car rental CDW is not insurance. Each state regulates insurance. A waiver is available for collision damage coverage. The car rental companies promise not to hold renters responsible for rental cars being damaged or stolen and that they will cover damages as per their coverage agreement.

Many times, the waiver includes “loss of usage” coverage. This pays the rental company if the vehicle is not rented. Car insurance policies do not cover loss of use in most states. If you don’t purchase the Collision Damage Waiver you may be subject to loss of use if your rental car is damaged. If you use your credit card’s auto coverage, however, this will cover any loss of use.

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Some car rental companies require that you pay upfront for any repairs or replacement costs. After that, you must get reimbursement from your own insurance company. A vacation can be destroyed if you are forced to spend thousands of dollars immediately. The CDW protects you from these unexpected costs. Read your rental contract CAREFULLY!

Personal Effects coverage. This covers personal property that is stolen or damaged while the car is being rented. The daily cost is between $2 and $5.

Supplemental Liability Insurance. This insurance provides coverage for up to $1,000,000 of liability. Prices range from $7 to $9 per day.

Personal Accident Insurance. This policy covers you as well as your passengers in your car for medical expenses. You don’t need to purchase this optional coverage if you already have personal travel and health insurance. It generally costs between $3 to $5 per day.

Corporate Travelers. Do one more thing if you frequent travel for business. Ask your company if they have a corporate policy on travel. If they have one, make sure you know what it covers. Then, don’t get duplicate coverage on your rental car contract.

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You can rent a car outside of your country. If you drive in another country, some insurers may not cover you. Some insurance companies will cover you for a limited period of time. Some credit card companies may cover rental cars outside of your country. For more information, check with your credit card company or insurance company.

Q: Can other people drive my rental car?

A: If you’re using your personal or business auto coverage to cover your rental car, the chances are all “authorized drivers” are covered. A policy will cover any person who is listed as an authorized driver. But here’s the catch: If your teenage son is the driver of your rental car, and he lets his girlfriend drive it, you are covered. No coverage if the girlfriend lets another person drive your rental car.

There are exclusions that car rental companies may make for young drivers. Some charge extra for young drivers. This information should be known before you go to the car rental counter.

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Q: How can I file a claim for an accident?

A: When you experience the damage or theft, immediately get a camera and take lots of photos of the damage, including any other autos or property that was damaged. Keep these photos! Notify the rental company immediately about the damage.

If you have business or personal coverage, report the damage to your auto insurance company.

When you return the vehicle, immediately ask for:

You should have a copy of the accident report, any claim documents and the amount that you are responsible for paying.
An original copy of the auto rental agreement.
A copy the repair estimate or paid repair invoice.
If there is one, a police record.

The bottom line is that:

You don’t usually need to pay for Collision Damage Waiver, or any other coverage offered by the rental car contract. You may have a different situation.

Take everything down in writing and make an informed choice. Then enjoy your car rental experience!

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