Everyone knows that auto insurance at the car rental counter is a rip-off — right? Well, not so fast.
According to auto insurance experts, the answer is actually a resounding “it depends.” Because of several factors, it might actually make sense to opt for the rental company’s coverage. The key is preparing in advance and knowing what you are currently covered for, what they are specifically trying to sell you and what your exact needs are.
“After 30 years of renting cars, my opinion is to prepare before you travel so that you do not have to make a decision when at the rental counter,” says Sharon Faulkner, executive director of the American Car Rental Association.
Understanding whether you need the rental insurance begins with understanding what exactly they are trying to sell you.
Typically, rental car companies offer a few very specific coverages. The first one to know about is a damage loss waiver. According to AAA, this waiver waives financial responsibility if your rental car is damaged or stolen. It also provides coverage for “loss of use” charges if the rental is being fixed or towed.
According to the National Association of Insurance Commissioners if you purchase your own comprehensive/collision coverage, you are probably safe to decline the rental car company’s waiver.
“Ask your insurance agent, review your credit card coverage and make sure you have coverage and if you don’t, decide what coverage you may want or need,” Faulkner says.
The next kind of insurance they typically offer at the counter is liability insurance. This doesn’t cover much, but it does ensure that if you are pulled over, you have enough coverage to keep you from getting fined. According to New York-based Insurance Information Institute, if you already have private auto insurance, this may be redundant to what you have already purchased.
Keep in mind, though, that liability coverage will not protect you if the rental is lost, stolen or damaged — just if you crash into someone or something.
If you don’t own a car but rent a lot, you can consider buying a non-owner liability policy that will offer state-required liability insurance at a lower cost than it would be at the rental counter.
Rental car companies often also offer personal accident insurance, which covers you and your passengers if you get hurt. But you might already be covered here with your medical insurance.
Finally, they offer personal effects coverage, which protects you if your laptop is stolen out of the trunk — but again, your homeowners policy may cover you here.
Credit cards, work rentals cars and insurance
So, when does it make sense to pony up and spend a bit extra at the counter? One case would be if you don’t own a car and don’t already carry personal auto insurance.
That’s because without a personal policy, you would otherwise be driving unprotected.
According to AAA it might also make sense to get rental insurance if are traveling for work — or at least make sure to consult your employer to get guidance on what coverage they might offer — because your personal coverage may not cover a rental car that is being used for business.
Many people also know that the credit card you used to rent the car may also offer some coverage, though it is likely to be limited — for example it may only offer secondary coverage — that is, it only covers you after you have filed a claim against your primary coverage.
Some cards offer more coverage than others, and some levels of cards offer better coverage than others — for example, a platinum may offer better coverage than a gold card.
Some cards are even moving to drop this benefit altogether, so make sure to do your research before you rent so you aren’t left thinking you have coverage that you do not.
It is good to know all this before you rent because the coverage they are offering at the counter may actually be a better deal.
Another thing you need to check is whether your personal coverage and or your credit card offers coverage for loss of use, administrative fees or towing charges.
If not, you might be in a situation where the loss was covered, but you still are stuck with hundreds of dollars in out of pocket expenses after even a relatively minor claim.
“When I travel, I still purchase the collision damage waiver for my peace of mind even though I have coverage on my personal automobile policy and my credit card coverage. It works for me - but may not be the same for everyone,” Faulkner says.