Properly insuring a rental car can be confusing, frustrating and
downright daunting. Unfortunately, many consumers do not even think
about car rental insurance until they get to the counter, which can
result in costly mistakes—either wasting money by purchasing
unnecessary coverage or having dangerous gaps in coverage.
Before renting a car, make two phone
calls—one to your insurance agent or company representative and another
to the credit card company you will be using to pay for the rental car.
- Insurance Company
Find out how much
coverage you currently have on your own car. In most cases, whatever
coverage and deductibles you have on your own car would apply when you
rent a car, providing you are using the car for recreation and not for
business.
If you have dropped either comprehensive or collision on your own car
as a way to reduce costs, you will not be covered if your rental car is
stolen or damaged in an accident.
Check to see whether your insurance company pays for administrative
fees, loss of use or towing charges. Some companies may provide an
insurance rider to cover some of these costs, which would make it less
expensive than purchasing coverage through the rental car company. Keep
in mind, however, that in most states diminished value is not covered
by insurers. - Credit Card Company
Insurance benefits offered by credit card companies differ by both the
company and/or the bank that issues the card, as well as by the level
of credit card used. For instance, a platinum card may offer more
insurance coverage than a gold card.
Credit cards usually cover only damage to or loss of the rented
vehicle, not for other cars, personal belongings or the property of
others. There may be no personal liability coverage for bodily injury
or death claims. Some credit card companies will provide coverage for
towing, but many may not provide for diminished value or administrative
fees. Some credit card companies have changed their policies, too, so
you may not have as much coverage as you thought.
To know exactly what type of insurance you have, call the toll-free
number on the back of the card you will be using to rent the car. If
you are depending on a credit card for insurance protection, ask the
credit card company or bank to send you their coverage information in
writing. In most cases, credit card benefits are secondary to either
your personal insurance protection or the insurance offered by the
rental car company.
If you have more than one credit card, consider calling each one to see which offers the best insurance protection.
At the Rental Car Counter
Since insurance is state regulated, the cost and coverage will vary
from state to state. Consumers, however, can generally choose from the
following coverages:
- Loss Damage Waiver (LDW)
Also referred to as a collision damage waiver outside the U.S., an LDW
is not technically an insurance product. LDWs do, however, relieve or
“waive” renters of financial responsibility if their rental car is
damaged or stolen. In most cases, waivers also provide coverage for
“loss of use,” in the event the rental car company charges the renter
for the time a damaged car can not be used because it is being fixed.
It may also cover towing and administrative fees.
Waivers, however, may become void if the accident was caused by
speeding, driving on unpaved roads or driving while intoxicated. If you
already have comprehensive and collision coverage on your own car,
check with your personal auto insurer to make sure you are not
duplicating coverage you already have. Should you decide it is
necessary, this coverage generally costs between $9 and $19 a day. - Liability Insurance
By law, rental companies must provide the state required amount of
liability insurance. Generally, these amounts are low and do not
provide much protection. If you have adequate amounts of liability
protection on your own car, you may consider forgoing additional
liability protection. If you want the supplemental insurance, it will
cost between $7 and $14 a day.
An umbrella liability policy, however, may be more cost-effective.
Umbrella liability insurance is so named because it acts like an
umbrella, sitting on top of your auto and homeowners (or renters)
liability policies to provide extra protection including accidents
while driving your own car or one that you rent. These policies,
usually sold in increments of a million dollars, cost as little as $200
to $300 annually for a million dollars worth of coverage and another
$50 to $100 for each additional million.
Those who do not own their own car and are frequent car renters, can
also consider purchasing a non-owner liability policy. This not only
provides liability protection when you rent a car, but also when you
borrow someone else’s car. - Personal Accident Insurance
Personal Accident Insurance offers coverage to you and your passengers
for medical and ambulance bills for injuries caused in a car crash. If
you have adequate health insurance or are covered by personal injury
protection under your own car insurance, you may not need this
additional insurance. It usually costs about $1 to $5 a day. - Personal Effects Coverage
Personal Effects Coverage provides insurance protection for the theft
of items in your car. If you have a homeowners or renters insurance
policy that includes off-premises theft coverage, you are generally
covered for theft of your belongings away from home, minus the
deductible. If you purchase this coverage through the rental car
company, it generally costs between $1 and $4 a day.
If you frequently travel with expensive items such as jewelry, cameras,
musical equipment or sports equipment, it may be more cost-effective to
purchase a personal articles floater under your homeowners or renters
insurance policy. With such a floater, your valuable items are
protected at home as well as while traveling anywhere in the world and
the coverage is broader.
Other Things to Consider
States have minimum age requirements for renting a car and most major
rental car companies refuse to rent a car to someone who is under 21
and in some cases under 25. In addition, some rental car companies now
investigate your driving record and/or credit history so check with the
rental car company before picking up the car.
If you are planning to rent a car abroad, contact both your insurance
agent and travel agent to find out what you need to do to be properly
insured. Those driving a rental car from the U.S. into Mexico may find
it progressively more difficult to rent a car as U.S. rental car
companies are increasingly concerned about the rising crime rates in
that country. The minimum required insurance coverage to drive in
Mexico is civil liability insurance which covers you in case you cause
injury or damage. Your American liability insurance is not valid in
Mexico for bodily injury, though some American insurance policies will
cover you for physical damage—check with your agent or insurance
company representative. You can also buy Mexican car insurance in
several American border towns; there are generally several storefronts
selling Mexican car insurance near the border.
Note: If you're renting a car abroad, you may need an international drivers license. |
