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Renting a car? Know your coverage at home and abroad

Benefits may let you refuse costly collision damage waiver coverage

Summary

Renting a car can put your credit card benefits into play, but only if you know what’s covered.

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You’re standing at the car rental counter, anxious to get on your way, but first you have to deal with the representative who’s pushing you to sign up for the agency’s car rental insurance “just in case.”

Should you?

Renting a car at home and abroad – how this guide can help

Most Americans have no idea what to do when offered collision damage waiver (CDW), the expensive add-on coverage offered – often forcefully – by rental car agents, particularly when abroad. Given the tricky exclusions listed in the fine print of most credit card policies, chances are, you’re even more confused about what your credit cards cover and if you can get credit card coverage for rental insurance.

We have answers to your big questions – and the questions you need to ask – so you can make an informed decision about whether to pay for the rental company’s coverage the next time you rent a car, whether you’re at home or abroad.

General benefits of rental insurance

Some form of rental coverage can be a wise investment because it can offer complete peace of mind. In other words, you can protect yourself in the event that your auto insurance deductible ends up being more expensive than rental car insurance.

Rental car insurance can also help protect you from a rate increase from your insurance company if you do end up getting a fender-bender while on vacation. Also, your personal car insurance may not cover the type of rental car you have, so this adds additional protection.

Do your homework ahead of time so you can rest easy, whether you’re headed to the beach in Florida or zipping around Japan in a Nissan Note.

Traditional car rentals

To find out whether your auto insurance company or credit card company can cover you, start by doing some in-depth sleuthing.

The first thing you need to do is pick up the phone and talk to your auto insurance company, then your credit card company. It’s better to have these conversations with an actual agent so you can be sure you’re getting the right answers for your personal situation.

Personal existing auto insurance

The best part of using your personal auto insurance is that you’re tapping into something you already have, so you don’t have to splurge on extra rental insurance. You might find that:

  • Your liability insurance would pay up to your policy limits for the damages to other cars or property if you cause an accident.
  • Collision coverage on your regular policy would pay for accident-related damages to a rental car.
  • Your comprehensive coverage would cover damages to the rental vehicle not related to a traffic accident, such as theft or vandalism.

There are some potential exclusions, however. Most auto insurers won’t cover you if you rent a car overseas, for example, or if you use the rental for business. Be sure to specifically ask about these exclusions. Many policies also decline to pay some of the additional fees that rental car companies typically tack onto the collision bill, potentially leaving you on the hook for hundreds of dollars. You’ll also be responsible for paying the deductible.

Utilizing a credit card

The perk of using your credit card for rental car protection is that you already have the card and can automatically get the coverage – no additional coverage is needed.

Generally speaking, credit cards do not cover personal injury or personal liability, although you may have that coverage through your auto insurance and health insurance. But they do typically cover collision damage and theft protection.

For most credit cards, the coverage is secondary, meaning that if you have car insurance, you have to file a claim there first. But your credit card should step in and pick up where your auto insurer leaves off, paying the tab for your deductible, towing charges and other fees.

Credit card companies have their own restrictions and exclusions and they, too, often refuse to pay some types of fees levied by car rental companies. Your credit card company may offer coverage only in certain countries, so before you book your rental, give your credit card company a call to find out if you’re headed to a country that isn’t covered. For all these reasons, it’s important to check your coverage in advance.

Based on all of the information and factors above from both your credit card company and your existing personal insurance company, that’s when you’ll need to do some critical thinking in order to determine whether you need more coverage.

Determine whether you want more coverage

If you do decide you need additional coverage, you don’t have to buy your rental car insurance at the counter. You can also buy your own separate rental car insurance policy, called a standalone policy. You must decline the rental car company’s insurance offer in order to do this.

Finding your own insurance company

If you do decide to get a standalone policy, the benefit is that you can research for a policy at your own pace. This way, you don’t have to give a rental car agent an answer about whether you want to purchase insurance within minutes. Three popular options for standalone policies are Allianz, Bonzah and Insure My Rental Car.   

Through a rental car company

Getting car insurance through your rental car company could mean that you pay up to $40 per day for coverage, which is pricey compared to a standalone policy or just sticking with your existing auto insurance or credit card company. The benefit of purchasing right at the counter, however, is that insurance is immediately available to you so you don’t have to do any research or digging into various policies.

Seriously consider purchasing rental car insurance through your rental car company if you’re mixing business and pleasure, you don’t have car insurance or you’re abroad. Finally, if you want complete assurance that you’re insured, opt for the rental car insurance.

Here are the different types of coverage you should know about broken down by carinsurancecomparison.com, no matter which type of insurance you opt for:

Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)The CDW is a damage waiver that will pay for all of the repairs to a rental car when it is damaged or stolen. The loss must happen when an authorized driver is operating the car and during the period when the waiver is valid.
Personal Accident InsurancePays for emergency medical transport and medical benefits if the renter or their passengers are injured in an accident.
Supplemental Liability ProtectionCar insurers are required to provide a limited amount of liability cover, but you can buy a supplemental amount of liability protection that covers you if you are sued. Anything that is carried by the rental agency is there to protect them and not necessarily you.
Personal Effects CoverageYou most likely will travel with valuable items. If you lose something of value, Personal Effects Coverage will pay to replace up to $500 of your valuables per person. Make sure you know how your property insurance works first.

Insurance for car-sharing services

Car-sharing services involve getting a car from a neighborhood or your surrounding area for just a few hours. The nation’s largest car-sharing service is Zipcar, and insurance is provided to members automatically with its hourly or daily rate.

Zipcar offers combined single limit (CSL) of $300,000 per accident for drivers 21 and older. CSL is a third-party liability coverage that covers the cost of injuries or property damage if a Zipcar member is at fault in an accident. Drivers get personal injury protection (PIP) for injuries that you sustain in an accident and the Zipcar is also covered by comprehensive insurance.

The insurance offered by all car-sharing services may not be the same as Zipcar’s, so read each car-sharing service website carefully, or even better, call the company’s customer service line.

Insurance for peer-to-peer renting

Peer-to-peer (P2P) car sharing means that you rent another person’s vehicle, typically when the owner isn’t using the car very often. It can be likened to VRBO – for cars.

As for whether you or the car are insured through a P2P, you’ll have to check with your insurance provider and determine whether you need to upgrade to have a guest policy. Note that many car insurance companies have excluded all types of coverage (liability, medical, physical damage, uninsured motorist coverage) if you use a P2P vehicle.

Two of the most popular companies in the P2P business are Turo and Getaround.  

Didn’t get coverage and it’s too late now?

Did you slam on your brakes as fast as you could but an accident happened anyway? Rather than beat yourself up about not getting rental car insurance, know which steps you’ll need to take next.  

  1. After you’ve made sure everyone’s okay, exchange contact and insurance information with the other party involved in the accident.
  2. Contact your rental car company to inform them of the accident.
  3. Call your own insurance company. Ask if they will file the accident report with the police or if you will need to do that. Ask questions about what type of insurance the company offers and what the deductible will be. Your insurance company will only pay for the results of the damage if it offers first-party coverage.
  4. You’ll pay rental expenses for the length of time it takes to fix the car, and be sure to ask questions about the costs you’re responsible for.

It’s best to never put yourself in a situation where you’ll need to pay out of pocket unnecessarily. Prior to getting a rental car, always call your credit card company and auto insurance agent to discuss how you’re covered.

Also, as soon as you first get the rental car, don’t drive away immediately. Write down all flaws, or even better, take pictures of the car and the gas gauge. You don’t want to be held responsible for dings or road rash you didn’t cause.

 

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