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Do I Need Rental Car Insurance?

Nick
Carroll
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F

or the week of Halloween, I flew to San Antonio to celebrate my son's birthday.  It was a real treat to also take him door-to-door knocking on neighbor's and stranger's doors asking for candy.  The concept alone seems strange and creepy. 

However, before my arrival into Military City (nickname for San Antonio), I rented a vehicle. As always, I typically decline the add-on features from navigation to fuel surcharge. Now that my travel transportation was locked in, it was up to the pilot to help me arrive safely.  

 

Once arriving and after getting my luggage, I approached the rental car desk. Immediately, the desk clerk asked which coverage I wanted for the vehicle. The question wasn't rhetorical or a dead-end question. The cost range of having the most basic car rental insurance coverage from rental agencies are from $15 to $30 per day. This can add up fast, depending on the taxes and number of days you are renting. USNews reports the total upcharges can range from $20 to $50 per day.

 

She demanded I needed the necessary insurance coverage, the basic package, or the next step above to ensure I have peace of mind and adequate coverage. Plus, she went the extra mile by mentioning most personal auto insurance companies don't cover rentals?

 

What shocked me is the fact she never acknowledged my decline to the insurance when I made the reservation. Why didn't she mention that?  

 

Knowing this was a trick question, it did get me thinking, "Does my auto insurance cover a rental car?" In this world of cheap sales tactics, are rental cars covered by anything or anyone? It's like purchasing airline tickets only to discover you must still pay for luggage, meals, snacks, headphones, and toilet (I made up that last one). We want some coverage, but what is covered in the event something happened?

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In this article, you will discover whether or not you need additional insurance for your rental car coverage.

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Does My Auto Insurance Cover a Rental Car?

The last thing to invite into your little vacation is renting a car only to have an unfortunate accident and liable charges from the damages.  

 

But are you covered by your personal auto insurance? It depends on your insurance company. For instance, if you have coverage through USAA, "Liability coverage on your policy extends to your use of non-owned cars, pickups as well as moving vans for personal use."

 

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Having auto insurance through State Farm, "For most people traveling for personal reasons, paying extra for coverage from a car rental company is probably a waste of money.

 

But there are a few situations when you should consider it: Your personal car insurance has a very high deductible, doesn't include adequate collision or comprehensive coverage, or doesn't cover rental cars (some don't).

 

You have no other source of coverage. For example, if you don't own a car and therefore have no personal car insurance policy, and you're not using a credit card that offers rental car coverage." 

 

Like the phrase, "One size fits all," this doesn't apply to auto insurance. Every company, every firm has its coverage limitations, policies, reimbursements, etc. 

 

One of the largest insurance companies, USAA, acknowledges that it is likely most insurance companies will provide some coverage. "If you cause an accident while driving the rental, your liability insurance would pay up to your policy limits for the damages to other cars or property." 

 

For your homework, you need to read and learn, "How much liability coverage you are paying for in your auto insurance?" Also, it is essential to note that for accident-related damages, your collision coverage protects you, while your comprehensive coverage protects accidents such as theft or vandalism to the vehicle. Your coverage is up to the policy limits.   

 

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Before Purchasing Car Rental Insurance

There are instances where you need to purchase additional coverage. Below are some common insurance options when renting car:

  1.  Loss Damage Waiver (Collision Damage Waiver)

    • Reduces financial liability resulting from loss or damage to the rental car

    • You'll still be liable for a deductible with your personal insurance

    • Considered additional coverage for maximum protection that may not be covered by your personal insurance

  2. Additional Liability Coverage

    • Covers bodily injury, death, or property damage

    • Protects up to $1,000,000 in most cases

  3. Personal Accident Insurance

    • Provides coverage for all passengers for accidental death benefits and emergency medical expenses. The amount of coverage will depend on the rental agency. 

    • Delivers 24-hour coverage during rental period

  4. Personal Effects Protection

    • Protects personal belongings, typically up to $500-$600 per person

    • Maximum coverage for everyone's belongings is limited to $2,000 or less in most cases

 

If you find that your policy does not provide adequate coverage, purchase added coverage, but it is recommended to buy it through a third-party vendor.  

 

According to RentalCover.com, "Getting an insurance policy from a standalone insurance provider can save you up to 40% of your money."

 

After purchasing added insurance, take a few minutes to read through the fine print. While this may sound like a daunting task, you should look to see what is being excluded from the contract. "The most common exclusions in car rental insurance are damage to the engine, tires, wheels, roof, undercarriage, windows and mirrors." Most rental cars are newer models, and it is unlikely to experience such issues.  

 

Typically before I sign for the rental, most clerks tell me to annotate any damages to the car that exceeds the size of a quarter. Take a few minutes to examine it. While the parking garages that house most rental cars can be somewhat dark, use the flashlight on your phone to explore and take a few photos before driving off with the rental. 

Source: Wix Photo Gallery

Rental Car Insurance on Credit Cards May Offer Additional Protection


Most consumers are not aware of some added benefits of using their credit card to make reservations for their auto rentals.  

 

For example, according to Capital One, "If the credit card you use to rent a car provides collision insurance, you may be covered in case a fender bender interrupts the family camping trip."

 

Another benefit is the added protection of receiving Travel and Emergency Assistance Services 24 hours a day, 365 days a year. This feature is offered by most credit card companies, but also by your banking institution. 

 

The type of coverage received will vary by the type of credit card you have. For instance, a Capital One Platinum protects auto rentals with the Auto Rental Collision Damage Waiver (CDW). This type of coverage can provide added protection for up to fifteen "consecutive" days in your country of residence. If you reside in another country, the number of days may increase up to thirty consecutive days.  

 

It is imperative to remember that luxury vehicles may not be covered. In terms and credit card benefits guide, you may find that expensive auto rentals, such as a Bentley, some Daimler models, Porsche, Aston Martin, are not covered. If you own a Capital One Platinum card, you can check your coverage here.

 

For most other auto rentals, using the Platinum One card for reservations, you will receive Auto Rental CDW up to the "actual cash value of most rental vehicles." 

 

According to ThePointsGuy, "One often overlooked perk of many credit cards is car rental coverage if you're in an accident or have your rental vehicle stolen or otherwise damaged."

 

Read the list of Credit Cards with Rental Car Insurance
 

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What Rental Car Insurance Do I Need


It is tempting to politely inform the rep behind the counter that you decline the insurance coverage.  After all, the added protection package can nearly double the cost of the rental car per day.  

While not all rental car companies are created equal, you must verify the current coverage you already have, as mentioned above.  

Therefore, know what your insurance covers.  Ask your financial institution, the insurance company, and the credit card company what rental protections you have.  

Clarify with them the amount of Loss Damage Waiver coverage you have and if you have comprehensive and liability insurance.  These are the most common for auto insurance and are likely to cover your rental car.  

If renting a luxury car, your private insurance may not cover the cost replacement value of the vehicle if damaged.  Once you involve your insurance company to cover charges up to their coverage limitations, expect to see your insurance premiums increase.  

After you've determined what is covered by your private insurance, use the coverage limitations as your baseline to determine what additional coverage should be added.   

Next, your secondary insurance coverage can potentially be protected by your credit card company if the reservation was made with that card.  

Earlier, you read how each credit card provides different benefits.  You will want to verify with your credit card company what reimbursement offers, theft or vandalism coverage, or personal liability coverage are offered.

Rental car agencies will try to upsell you with their roadside service package.  Don't waste your money unless you are sure you do not have this coverage.  However, if you get a flat tire or two, you may be responsible.  

Most banking institutions offer roadside assistance with insurance protection.  Also, you may already have AAA protection or benefits from other international auto clubs.

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Accidents When Returning a Rental Car

When rental cars are returned, the lot representative will examine the vehicle thoroughly. He or she will input the mileage into the computer, will determine the fuel amount is adequate and will inspect for any damages. 

 

Hopefully, you can walk away without any interruption to your travel. Other times, scenarios have occurred when tire scuffs or tire damage is presented, and the customer is presented with a bill.  

 

For instance, when Lucas Peterson took a trip to Hawaii, he politely refused the Hertz Insurance Package. During the journey, the car had not one, but two flat tires. He was later charged with $148 for the tires. He writes about the horror of the charges and the mountain of paperwork to resolve the issue. Read about it here.

 

It is vital to keep all receipts, claims, pictures, and interactions during any dispute. Having records will ease the frustration and process in resolving any administrative complaints that may occur. 

 

Make it a practice to take photos of the rental car before and after driving away from the rental agency. There have been situations where customers receive a bill six months later for hundreds of dollars.  

Car Rental Coverage

After researching numerous articles and combing through insurance companies pages on rental car policies, it boils down to this:  Read Your Personal Auto Insurance Policy and determine what is currently covered.  

A few takeaways for you to remember is after verifying what is covered, call your credit card company and determine what benefits they offer.   Next, remember these few easy terms:
Loss Damage Waiver is just a waiver. 

 

It waives your responsibility for repairing or being expensed for damages made or stolen.  


Collision Damage Waiver covers losses caused by collisions.


Personal Coverage comes in two primary forms: effects (personal belongings) and accident (personal injuries).  


Knowing these few definitions will help you in your decision-making ability to determine the appropriate coverage you need on your trip.

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