Should you accept rental car insurance? The question that always comes up when you rent a vehicle is: Should you purchase the Damage Waiver, which limits or eliminates your financial responsibility for damage to the vehicle you rent? This protection is not cheap, it can cost between $63 and $210 per week, depending on where you rent your chosen vehicle and which company you sign the contract with.
In the past, we recommended not purchasing this additional cost. If your personal vehicle insurance included collision coverage and/or comprehensive coverage, or if your credit card provided such credit. Today, however, the decision has been “considerably complicated due to the fact that many companies are charging their customers for the depreciated value and administration fees when they crash the rental car,” says Kip Diggs, a spokesman for State Farm, the company largest auto insurer in the United States. State Farm generally does not cover these charges. Here are the three steps to make this decision easier for you.
1.Check your car policy
The insurance that covers your car is the first line of protection to cover a rental vehicle. Which of course gives you basic liability coverage for damages. That you could cause to other people with the rented car and to other vehicles and property? If you don’t own a vehicle, and therefore don’t have auto insurance. You can and should purchase a temporary or annual “vehicle non-owner beneficiary policy” from an insurance company. Such a policy should be reasonably priced.
In order to protect a rented vehicle, your personal insurance must also have collision coverage (covering damage to your own vehicle due to an accident with another vehicle or object or rollover) and/or comprehensive coverage (covering damage to your vehicle caused by causes other than a crash, such as fire, theft, vandalism, flood, fallen tree limbs, etc.). If you have any of these coverages, check the small print carefully to know exactly what the coverage covers, or better yet. Call one of the customer service representatives of your insurance company and ask if your policy :
- Does it extend the coverage for rented vehicles? Generally, your coverage, deductibles, and other terms are the same for a rental car as they are for your own vehicle.
- Does it include coverage for business travel? There may be a hidden trap here. Maybe your policy doesn’t cover this. However, your employer’s insurance may cover it if you’re going on a business trip; therefore, you should find out if that is the case. If your employer wants you to accept or reject the liability waiver. Be sure to check the regulations and coverage. If you plan to use some days of the business trip as personal vacations.
- Do you pay rental agency fees? Auto policies may or may not cover administrative charges, towing, and loss of use of the vehicle while it is being repaired and depreciated value.
- Do you pay “full value” for the car rental? If not, ask if you can add “supplemental” insurance to your policy, which replaces the total loss of the vehicle with a new one.
If you plan to decline the waiver and your personal vehicle insurance provides you with a good foundation of protection, it may still be deficient. To fill those gaps, turn to your credit card.
2. Analyze the benefits of your credit card
Car rental protection benefits are provided by various credit cards rather than by the card-issuing bank and may vary by card type. For example, American Express, MasterCard, and Visa bear the loss of use charges, as long as the rental company supports them with proof of loss. The Discover card explicitly excludes loss of use.
The protection against loss of rental vehicles is not provided by any card. So before purchasing or reserving the rental car. Contact the customer service of your card to make sure. That the card you are going to use has said protection . And find out about the specific coverage details of all your cards. Then, make your reservation with the card that provides you with the best coverage.
Credit card coverage is usually secondary insurance; therefore, your personal vehicle policy will assume the payment of the damage or theft of the vehicle (if you suffer a collision and have comprehensive coverage). While the credit card company will collect all or most of what is left, subject to their own limits. Some losses are not covered by the cards, such as depreciated value.
Some vehicles may not be cover, such as pickup trucks, some SUVs, and especially expensive or exotic cars; therefore plan well if you are going to ride in a Chevy Corvette, Dodge Viper, Cadillac Allante, BMW M3, Mercedes SLK, Porsche, Ferrari or Lamborghini rental vehicle.
This coverage applies only if you decline the rental agency’s damage waiver and book and pay for the rental with a specified credit card. The card holder must be the same person who rents the vehicle.
There are many details to review, so ask your credit card customer service representative to explain and confirm over the phone and send you a paper copy of the insurance terms so you have them in writing. You can also find the terms on the card’s website, but it’s best if you contact a representative directly.
3. Read the car rental agreement
Unfortunately, you probably won’t be able to do this until you get to the rental company’s counter. Where you may feel pressured to hurry by people behind you in line. (For example, we couldn’t find rental agreements online). But stand firm despite the stares and complaints. And read the fine print of your rental agreement.
Look for the sections that express your liability under state law. Should an accident occur, and details about the rental agency’s disclaimer. If state law limits your liability exposure and your auto policy. Credit card are sufficient to cover your liability. You can safely skip LDW, which is really, in a narrow sense. A waiver of your liability rather than of real vehicle insurance.
For example, a Hertz rental agreement we saw in California limited the renter’s liability to the actual market value of the vehicle. Plus towing and storage charges, as well as administrative and lien charges. For vehicle vandalism loss or damage unrelated to theft. The limit of liability was $500, and renters were not responsible for theft-related loss or damage. Unless it was the result of carelessness than normal.
Instead, a Texas rental estimate agreement stipulated that the customer was responsible for “all” loss or damage, including loss of use, subject to any limits imposed by law. You must pay for the liability waiver if you rent a car abroad or in Mexico (where it may be call collision damage waiver). Because you’re personal auto insurance is generally valid only in the US, in its territories and in Canada.