You are standing at the car rental counter, and the salesperson asks if you want the extra car rental insurance. You say no. The sales person then gets pushy, and you start to doubt your decision. Extra car rental insurance is crazy expensive. It is also a money maker for the rental companies.
I spent 15 years in the auto insurance industry, and I was frequently asked, “Do I need to purchase the extra car rental insurance?”
Types of extra car rental insurance
You will need to accept or decline two types of insurance on the rental contract.
Supplemental collision damage coverage is insurance for the rental car if it gets damaged.
Supplemental liability coverage is insurance for other people if you are at fault.
Here are some tips to know if you really need extra car rental insurance:
1 – Reasons for renting the car
Are you renting the car for vacation or work?
Your own personal auto insurance will likely provide insurance for you when you rent a car for vacation. You should be safe declining the extra insurance. You can use your own personal insurance. This can save you $22 or more per day on your rental bill.
Your company’s insurance policy should provide insurance for you while you are driving a rental car for business.
You should check with your insurance company to be sure of any restrictions. These are just general statements to give you a little direction. Every policy and company is different!
2 – Know what coverages you have on your own personal auto policy
You may not carry collision or comprehensive coverage on your auto policy if you drive an older vehicle. Collision coverage is the coverage that pays for your own car. It has a deductible when you get in an accident. Comprehensive coverage covers your vehicle from acts of god, vandalism or theft (think hail, flooding, and bad guys)
You should purchase the supplemental collision damage coverage if you do not have these coverages on your policy. There is an exception to this rule, which is covered in #3 when paying by credit card.
Buy all the coverages the rental company offers if you have no personal auto insurance. You really will be screwed if something happens. (See #3 for possible credit card coverage for the rental vehicle itself if paying by credit card.)
3 – Your credit card may provide extra car rental insurance
If you are paying for the rental with a credit card, there is a chance your credit card company offers extra car rental insurance. You must decline the extra insurance with the rental company.
There are a few credit card companies that will add liability insurance for an accident. However, this type of insurance through your credit card company is not common. Your personal insurance will still need to pick up the damages if you are at fault for an accident.
In order for a credit card company to pay for any damage that may occur to the rental car, you must put the entire rental cost on the credit card and have the extra benefit.
Not all credit card companies offer extra insurance. Even if the credit card company offers the extra insurance, they often have strict restrictions. For example, they may not provide insurance after so many days in a vehicle or if driving on dirt roads.
Before leaving on a trip, call your credit card company. They should be able to share the details and any restrictions for extra car rental insurance.
4 – International insurance
If you are leaving the country and driving a rental car, your personal auto insurance will almost never provide benefits. There are usually only minor exceptions. It is possible your credit card will provide some insurance. Again, call the credit card company before you leave on your trip to get the details. It could save you big bucks.
5 – What to know if you have an accident in your rental car
If you have an accident and you declined any extra coverages, you will be responsible for your collision deductible. Hey, it’s no different from wrecking your own car! Make sure to call the rental company, your personal insurance company, and your credit card company. They can figure out who is paying first. Your credit card may reimburse you the collision deductible.
If you used your personal auto insurance instead of the extra car rental insurance, there is a chance you will owe an administrative fee to the rental company after a loss. The administrative fee is usually around $200. Your personal auto policy does not cover this charge. A good insurance company will try to negotiate it away with the rental company. However, there is a good chance you will owe this on top of your deductible.
Mathematically, if you decline all extra car rental insurance, you are out your deductible plus $200, in most cases.
I’m confused. Do I need to buy extra car rental insurance?
Short answer, you can usually get away with declining any extra car rental insurance if you are going on vacation and have your own personal auto insurance. You also stand a chance for more insurance if you put the entire rental bill on a credit card with extra benefits.
Make the best choice for your situation.
If you decline all extra car rental insurance, the worse case scenario could sting a little. Statistically speaking, most people do not get into a car accident on vacation, and the price of extra car rental insurance can add up quickly. I take my chances and do not purchase the extra car rental insurance. The money saved over numerous trips is already enough to pay the deductible and administrative fees several times over.[mailerlite_form form_id=11]