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If there’s one rule of buying rental car insurance, it’s this: Don’t make your decision at the counter.
With so many options available — and the potential to save money by leveraging credit card perks or your existing auto insurance policy — making a decision on the fly can be costly, according to experts.
“Getting car rental insurance at the car rental counter is the most expensive option there is,” says Jonathan Weinberg, cofounder and CEO of the car rental site AutoSlash.
For now, non-essential travel has largely been paused due to the pandemic. If you’re planning ahead for a future trip, you can use this time to brush up on rental car insurance tips and tricks that will save you money and give you the coverage you need when it’s time to hit the road again.
In fact, you may not need to purchase insurance at the rental car counter at all. Here’s how to decide when you need the coverage — and when you can decline the offer.
What Are the Different Rental Car Insurance Options?
Rental car insurance options can be broken up into a few different categories. They are:
If you cause a car accident, liability coverage helps pay for any damages or injuries you cause to the other party. It does not pay for your own injuries or damages to the vehicle you are driving. Since liability coverage is required in almost all states, you probably already have it as part of your car insurance policy. However, if your limits are low, you may want to purchase supplemental liability coverage when you rent a car.
Collision/Loss Damage Waiver
A collision/loss damage waiver isn’t technically insurance. It’s an agreement that prohibits the rental car company from suing you for loss or damages to the rental car while it is in your possession. It covers theft and damages from collisions, vandalism, weather, and other incidents. With this waiver, you don’t have to pay a deductible and all losses or damages will be covered without limits. Many credit cards offer this benefit to their users, but requirements and terms vary.
Personal Accident Coverage
Personal accident coverage helps pay for your medical bills if you are injured in a car accident. If you have personal injury protection or medical payments coverage as part of your auto policy, you won’t need to purchase personal accident coverage, provided you don’t mind paying your deductible. Personal accident coverage also provides a lump sum payout in the case of accidental death, which may be duplicate coverage if you have a life insurance policy.
Personal Effects Coverage
Frequently sold in conjunction with personal accident coverage, personal effects coverage helps pay to replace your belongings if they are damaged while in the rental car or stolen from the rental car. Most homeowners/renters policies cover your belongings even while you’re traveling, so if you have this coverage already, you likely don’t need to buy personal effects coverage at the rental counter.
Rental Car Insurance Vs. Your Own Auto Insurance
Collisions and Theft of the Rental Car
Your Insurance: Collision coverage helps pay for damages to your vehicle after an accident, and comprehensive coverage helps pay for damages from other events, such as vandalism or hail. This coverage generally extends to rental cars, but you’ll still be required to pay your deductible — and may be on the hook for covering the rental company’s loss of use of the vehicle. That means you could be forced to pay the daily rental fee for however long it takes to repair the vehicle.
Rental Insurance: If you purchase a collision/loss damage waiver, you’ll be protected from financial responsibility for anything that happens to the vehicle. That includes damages and theft as well as loss of use. A collision/loss damage waiver is not an insurance product, but rather an agreement that the rental car company won’t sue you for any damages. There’s no need to file a claim in the case of an accident, and paperwork is generally minimal. Some people choose to buy the waiver simply because it’s more convenient and doesn’t require a deductible.
Many credit cards include a collision waiver benefit as a perk—but specific terms and conditions will apply. Call your issuer to get details before your decline at the counter.
“Whether your insurance company is going to cover or not cover the rental is up to your insurance company,” says Shawn Powers, vice president of sales and operations at Insurify, a comparison shopping site for insurance policies. Powers says he typically purchases the waiver at the rental counter for convenience and guaranteed protection, especially for short-term rentals. It’s possible your insurance provider won’t cover the rental company’s loss of use of the vehicle, which means you could be charged the daily rental rate for the time it takes to repair the vehicle. And even if your insurer does cover these charges, you’ll still be subject to a deductible. “I don’t want any of that headache,” said Powers.
Damages and Injuries to Other Drivers
Your Insurance: Liability coverage is required in most states. This coverage will help pay for injuries or property damage incurred by another party in an accident you cause, whether you’re driving your own vehicle or a rental car. If your limits are low, however, you might want to consider purchasing supplemental liability coverage.
Rental Insurance: Supplemental liability coverage pays for injuries and damages to other people with much higher limits than the typical minimum liability coverage required by most states. It’s important to purchase this type of insurance when renting a car if you don’t have your own insurance policy.
Medical Expenses for You and Your Passengers
Your Insurance: Your health insurance policy will likely cover your medical bills, and if you have personal injury protection or medical payments coverage as part of your auto policy, it will kick in as secondary insurance and cover your deductible. If you have a life insurance policy, you’ll also be eligible for death benefits if you die in an accident.
Rental Insurance: Personal accident insurance will cover medical expenses from injuries you or your passengers sustain in an accident. It will also pay a lump sum to your beneficiaries if you die in a crash.
Stolen or Damaged Belongings in the Rental Car
Your Insurance: Most homeowners and renters policies cover stolen or damaged belongings worldwide, so you can file a claim even if something happens while you’re on vacation. However, you’ll need to pay your deductible, and you’ll only be covered up to the limits of your policy. You’ll also need to file a police report before your homeowners or renters insurance provider will reimburse you.
Rental Insurance: If you purchase personal effects coverage at the rental counter, you’ll be covered against stolen or damaged belongings in the vehicle up to a limit.
Using Your Credit Card for Rental Car Insurance Coverage
Many credit card issuers provide a collision/loss damage waiver as a benefit for cardholders. It’s usually secondary coverage, which means it kicks in after your auto insurance policy, but some premium travel rewards cards offer primary coverage. Limits and exclusions vary, however, so be sure to check the terms of your credit card agreement before relying on this coverage.
In order for your credit card coverage to apply, you must charge the entire amount to the card, put the rental in your name, and decline coverage at the counter.
Some waivers included as a benefit for cardholders exclude loss of use charges and can’t be used for certain vehicles, like large vans or luxury cars, says Weinberg. They also come with coverage limits.
“Some policies only cover you up to $50,000. If you get tempted by that Mercedes SL convertible that’s got a sticker of $70,000 and it gets totaled, you may be on the hook for the [difference] between what your credit card policy covers and the high-end vehicle,” said Weinberg.
You should also be sure to check if there is a limit to the number of days a rental can be covered, and read the fine print for any other exclusions, such as international rentals.
Third-Party Rental Car Insurance
Some third party rental insurance providers are able to offer rental car insurance that you can purchase by the day at a significant discount when compared to what you’d pay at the rental counter. Weinberg said AutoSlash partners with Sure to offer customers rental car insurance at less than half the price they’d pay at the counter. There are a few other options to consider as well. You can buy these policies online and then decline the coverage at the counter.
Sure plans start at $10 per day and vary by state, and you can get a quote for your rental car on Sure’s website. Sure coverage is backed by Chubb and includes up to $100,000 of coverage for damage or theft to the rental car. You’ll also be covered for lost keys, flat tires, misfueling, and towing.
Allianz Global Assistance
Allianz Global Assistance offers coverage starting at just $9 per day ($7 for Florida residents), and you can get a quote for your rental car online. The plan includes a primary collision damage waiver that covers up to $40,000 in damages or theft to the vehicle, up to $1,000 each in trip cancellation and baggage loss/damage coverage, and access to a 24-hour assistance hotline.
Bonzah’s damage coverage costs $7.99 per day and covers up to $35,000 in damages or theft to the vehicle. The insurance is primary and there’s no deductible. You can also add extras like emergency roadside assistance and supplemental liability coverage.
What Makes Sense for Me?
Both Weinberg and Powers said it’s essential to cover the rental car itself — so if you don’t have comprehensive and collision coverage on your auto policy, and you’re not using a credit card that includes the waiver as a benefit, you should purchase the collision/loss damage waiver at the counter or through a third party insurer. If you’re going to decline coverage at the counter, “I’d make sure that my policy covered it” first, says Powers.
Look into all your options ahead of time, experts advise. “Standing at the rental car counter on the end of the hard sale from the car rental agent is probably not the best time to think about whether you may or may not be covered,” says Weinberg. That may mean calling your insurance agent, reviewing the fine print in your credit card agreement, and comparing coverages available through third party insurers.