When I Rent a Car, Do I Need the Insurance?

When I Rent a Car, Do I Need the Insurance?

Sometimes we are asked whether it’s necessary to pay the extra cost of insurance when renting a car.

This answer is… it depends.

Rental Car Insurance Tips

According to the New York Times, before visiting a rental car counter, it’s wise to make two telephone calls…

“Many people feel pressured to buy the rental company’s insurance coverage on the rationale of better safe than sorry, even though it can cost up to $30 a day.” said Norma Garcia, a lawyer with Consumers Union, the advocacy and policy arm of Consumer Reports. But if you verify coverage you may already have before setting out on vacation, she said, “You can be safe and not sorry.”

1) Before you rent a car, find out what coverage is included in your auto insurance policy

If you have dropped optional coverage on your car, like collision coverage, to save on premium costs, your rental may not be covered if it’s damaged. In this case, you should consider buying the rental company’s “loss damage waiver”, also called a collision damage waiver, so you won’t be responsible for damage to the car.

In many states, auto insurance policies do not cover “diminishable value” or a drop in the car’s value because of damage and repairs.

“Rental car companies are required by law to provide liability coverage with the rental at the state-mandated minimum which is low.” Worters said. Liability coverage protects you if you injure someone or damage their car in an accident. Rental companies may sell “supplemental” coverage with higher limits, but if your personal auto policy is adequate, you probably do not need to buy extra, the National Association of Insurance Commissioners says.

Rules vary by state, however. In some states, your rental may still be covered if you drop optional coverage on your personal policy. So confirm details with your insurer.

2) Before you rent a car, find out what coverage is provided by your credit card company

Some credit card companies offer rental coverage at no extra cost as a perk for customers that pay for a car rental with their card. Coverage varies, though, and not just depending on the payment network (e.g. Visa, MasterCard, Discover) but also the company issuing the card (e.g. Chase, Capital One), and even from card to card issue by the same company (e.g. Gold Card, Platinum Card).

Either review your credit card’s terms of service online or call your credit card company for this information. Get the terms in writing, whether that means printing the information from the website or having the credit card company send it to you.

Some specific car rental insurance details to look for:

  • Coverage length. Some card policies cover rentals of up to 30 days but others limit coverage to rentals of no more than two weeks.
  • Vehicle types. Some card policies exclude some sport utility vehicles, trucks and expensive cars.
  • Countries. Many card policies exclude coverage in certain countries. Citibank and Discover credit cards may come in handy when traveling internationally, as they cover cars globally.

 

What credit card has the best car rental insurance benefits?

The New York Times evaluated 10 credit card issuers on 11 criteria including the claims process, the duration of coverage, and exclusions.

  • Citi cards generally offered the most favorable insurance coverage overall, although Citi’s claims process may require a bit more paperwork than other cards.
  • USAA American Express cards also got high marks.
  • Of the four card networks, MasterCard and Visa scored highest overall for their insurance offering, the report found.

 

Note that credit card rental car insurance is usually secondary or backup coverage that pays for expenses like your deductible that your personal auto policy may not cover. The card policies generally do not provide liability coverage for damage to other cars or injuries to other people. This is why before renting, it’s also important to check the coverage on your personal auto policy.

3) My rental car insurance decision

When I rent a car, I purchase just the ‘loss damage waiver’ coverage and no other coverage. I have liability and collision coverage under my auto insurance policy, but I get this additional coverage to protect against the gaps in my insurance coverage.

For example, if I were in an accident in a rental car, my collision coverage would pay for the damage to the rental car, however, I would be responsible for the deductible. If the rental car was out of service while repairs are being made, I would be responsible for the loss of business revenue to the rental car company, not my insurance company. If the rental car lost value because of the damage resulting from the collision, my collision coverage would not cover that damage either.

By purchasing the loss damage waiver coverage from the rental car company, the rental car’s insurance company becomes responsible for these liabilities instead of me.

If you’ve been involved in a car, motorcycle or truck accident and would like to talk to a New Port Richey motor vehicle accident attorney, contact the Law Office of Charles S Philips, serving Trinity, Spring Hill, Brooksville, and Inverness.