Susan S. Craver
MBA, AMA Certified Professional in Management – Assistant Teaching Professor, Cofrin School of Business – UW-Green Bay
When does it make sense to buy insurance from a rental car company?
The answer is, sometimes it makes sense, and other times it does not. When to buy rental car insurance depends on your personal situation. If you own a car and have an auto insurance policy, you MAY be covered, but not always. Before you rent a car, it would be a smart move to call your auto insurer and your credit card company to confirm what’s covered under your auto policy and credit card, and what is not covered. Rental car agents may try to upsell you on the insurance even if you don’t need it. So, it is helpful to be informed before you get to the rental counter!
You will want to consider buying rental car insurance if you do not have a car and a car insurance policy. If you do not, you will not have any auto coverage if you get into an accident, or the rental vehicle is damaged or stolen. Therefore, if this is your current situation, buy the liability and damage waiver insurance that is offered by the rental car agency.
You may also want to consider buying rental car insurance if you are traveling internationally. US auto insurance usually will not provide coverage in those situations. Also, usually, your credit card coverage will not work either. Therefore, buy the rental car insurance if you are traveling abroad.
If you are thinking about renting a specialty vehicle (that nice convertible when vacationing in Florida!) or maybe, you want to splurge for a day and rent a Lamborghini – your regular auto insurance may not have enough coverage. Therefore, rental car insurance policies are probably a smart choice.
Before renting a car, you may also want to be familiar with your current auto policy. You want to make sure you have collision coverage and comprehensive coverage. If you do not, you should add the rental car agency’s Loss Damage Waiver. This will cover any damage or theft to the rental car since your personal policy does not have that coverage.
Another reason you consider the rental car policy is if you only have “state minimum liability” coverage. Most times, these limits are low and most likely will not cover a major accident. Therefore, buying supplemental liability insurance from the rental car company can fill in that gap.
Finally, you may want to consider rental insurance to avoid dealing with claims and deductibles. It can just help make the process of dealing with a claim on the rental car. This may be worth it if you don’t want to deal with the logistics of a claim.
So as a quick recap, there are some situations where you most likely will want the rental car insurance, as noted above. But you can probably waive the insurance in some cases. First, if you have full coverage with your personal auto insurance policy (be sure to check with your agent or your policy to make sure!). If you have a credit card that offers rental car protection (again, be sure to verify the details of how it can be used).
What are the biggest mistakes that people make with rental car insurance?
Insurance in today’s world is a necessary evil. Many times, consumers make mistakes about buying insurance. They don’t read the fine print. They have been traveling all day and are tired and just check a box without paying attention. Here are some of the biggest mistakes that people make when it comes to buying (or not buying) the rental car insurance.
Many times, people just assume that their personal auto insurance or credit card will automatically cover everything. But travelers need to remember that insurance coverage can vary based on many things. It can vary based on where you rented the vehicle. It can vary depending on the type of car being rented. The rental agency may have a different policy. So not understanding this can end up costing the person renting the car if they do get into an accident, or the car is stolen.
Another big mistake is not reading the terms of the rental policy. If you are violating the terms of the agreement – like letting someone else drive the car, or using the vehicle in a manner not allowed like driving on a beach or driving off road, or driving under the influence – these items may void the coverage. Read the small print and understand the policy and follow the rules so you don’t void the policy.
If you have an auto insurance policy that already covers rental coverage, and you just check the box and buy the rental car policy, you are wasting money. Be sure to know what your auto insurance policy or credit card policy covers before agreeing to buy more insurance.
If you are traveling abroad, some countries have specific rules. In some places, US insurance coverage does not apply. The same is true for credit card coverage. So – if you skip buying the insurance because you are assuming you are covered, that could be a costly mistake. It could also potentially cause legal issues.
Another potential problem is not documenting the condition of the car before and after the rental period. In fact, photos should be taken and all issues to the vehicle should be noted – even tiny dents or little scratches. Have proof that those were there before you drove off the lot can save some headaches later.
Also, don’t just decline the coverage to save money. Again, you may think your personal auto insurance will cover any damage, but that may not be the case, especially if traveling internationally. Also, your personal liability limits may be too low – thus leaving some gaps.
Finally, if you do get into an accident, you need to report the incident immediately. If you don’t, you may violate the rental agreement and put your coverage in jeopardy. So if your rental vehicle is damaged in an accident or stolen, report it immediately.
What is the most cost-effective way to get reliable rental car insurance coverage?
The most cost-effective way to get reliable rental car insurance is to use the coverage that you already have. Then if you need more coverage, buy additional from the rental car company.
The first step is then to check your personal auto insurance. You will need to determine your collision and comprehensive coverage. This is the coverage for damage to the rental vehicle. Next, you need to review your liability coverage. This covers any damage or injury to others.
Your next step is to use a credit card that offers rental car insurance coverage. Many credit cards offer free collision damage waiver, but you need to use that card when renting the car. Then you should decline the rental company’s collision damage waiver.
A final option would be to buy a supplemental rental car insurance policy through a third-party. This option could potentially be cheaper than using the rental car company’s insurance, but again, you will want to review and compare the pricing and the policies to make sure it is cost effective and covers any insurance gaps. Some reputable third party rental car insurance companies include Allianz, Insure My Rental Car, Sure and Bonzah.