How Best to Insure a Rental Car
Rental car firms make substantial profits from selling various types of coverage to unwitting customers who may be unaware that the insurance being sold is often quite unnecessary. It is therefore a good idea to research the subject before arriving to pick up the car, by making a few phone calls in advance.
As a general rule, whatever coverage is on a driver’s personal policy will transfer to a rental vehicle. Therefore, the first phone call should be to your insurer to get confirmation of coverage and deductibles. The only exception would be if the rental car was being leased for business purposes, as a personal policy would specifically exclude any cost or expenses incurred as a result of that activity. With the cost of insurance rising, some drivers have opted to remove collision and comprehensive from their coverage, meaning the rental vehicle would not be insured if it was either damaged or stolen, a state of affairs the leasing firm would certainly not be happy with.
The next set of phone calls should be to the credit card companies to find out which, if any, offer any level of protection for rental vehicles. If more than one card is held, usually the more exclusive cards such as platinum accounts provide the most comprehensive benefits. Insurance included in a credit card package is not usually as all-encompassing as that obtained from taking out a dedicated insurance policy and for that reason, they are usually best used as a backup or supplement to a main policy rather than as the sole support package. In most cases, only theft or damage is covered, with bodily injury and liability insurance not included in the coverage. If you rely on the coverage provided by your credit card, it is imperative to obtain confirmation of the policy details in writing prior to leasing the vehicle.
Loss Damage Waiver, also known as Collision Damage Waiver or Physical Damage Waiver, is one type of insurance the rental firm is likely to try and persuade a driver to purchase. Although this is technically not a type of insurance, it is usually bundled into the package for around $9–$19 per day. This coverage discharges the driver from any liability if the rental car is either stolen or damaged and generally includes the time that it is off the road undergoing repairs. Loss Damage Waiver is usually rendered null and void if the driver was reckless, driving under the influence, speeding, or driving on unpaved roads. While it may sound like a useful benefit, any driver who already holds comprehensive or collision insurance on their personal auto policy may already be covered. With towing and administration costs also included in the Waiver, there could also be some duplication with coverage provided by credit cards.
Supplementary Liability Protection is another type of coverage that rental firms will sometimes push, which may or may not be useful depending on the level of insurance already held. Each state requires rental firms to provide a minimum amount of liability coverage by law, but with only the bare minimum ever offered, many drivers feel more comfortable with slightly more insurance. However, most personal auto policies provide an amount beyond the legal minimum, making the purchasing of further liability insurance unnecessary. For drivers wanting more coverage than a typical personal policy offers, this type of extra insurance may be useful.
Personal Effects Coverage is a rider that rental firms ask drivers to consider purchasing in order to ensure their belongings are fully insured. The majority of policies cover between $500 and $1500 of personal effects. Before agreeing to add this at a cost likely of around $1 to $4 each day, it is worth double-checking any homeowners insurance policy, as many include an option for goods to be covered whilst away from the home. If this is already in place, additional insurance for personal effects is likely to be unnecessary. For individuals who regularly travel, insuring particularly expensive belongings under a personal effects floater attached to either a rental or homeowners’ insurance policy is advisable.
The final component to the insurance package that the rental firm may offer is personal accident insurance, a type of coverage that will pay out for medical expenses associated with any car accidents. However, this type of coverage is rarely required, as most Americans have either medical coverage on their existing insurance, or find that their health insurance adequately covers the cost. Anyone considering purchasing the coverage can expect to pay $1–$5 per day.
Before arriving at the counter to pick up your vehicle, it is worth considering a few other factors that may affect the insurance coverage. Rental firms are increasingly wary about leasing cars to individuals under the age of 25, with the vast majority refusing to consider drivers under age 21. Past driving records are now also taken into account, and a credit check may also be performed. Drivers unable or unwilling to provide a credit card may either find the car rental firm refuses to lease them a vehicle or insists on in-depth screening that takes several days to complete; a fact that is essential to be aware of in advance.
The final destination may also mean that some parts of the coverage become void. Due to rising crime rates, many insurers are restricting which parts of the insurance policy still apply for drivers crossing the border into Mexico, or in some cases, refusing to extend any coverage at all. Liability insurance purchased for the U.S. market will not provide any coverage for bodily injuries but some policies will still be valid for physical damages.
