What an Accident Taught Me About Car Rental Insurance

If you’ve ever had to rent a car, you know that car rental companies love to sell insurance on their cars. They’ll often ask whether you’d like just the basic coverage or additional coverage at the counter even after you’ve already declined both when making your reservation. After all, it’s one of their big profit centers.

Of course, when you’re busy traveling is one of the times when you’re least in the proper state of mind to make a good decision about this sort of thing. You may also not want to spend too much time thinking it over with a long line of fellow travelers behind you rushing to get somewhere. An NAIC study showed that 42% of rental car consumers  were “either thoroughly confused or had only a rough idea about insurance.” Some people skip it without thinking to save money while others buy it just to be safe. So is it a good idea?

Well, what could happen if you don’t buy the insurance? The worst case is that you get into a car accident, which is exactly what happened to me last week (on Fri the 13th of course) after declining the coverage. (Don’t worry, no one got hurt.) Here is what I learned from this experience:

Rent the car using a credit card with rental car insurance. Since I turned down the loss damage waiver, the damage to the car was charged to my insurance company and I was responsible for my $500 deductible. Fortunately, I had made sure to rent the car with a credit card that offered rental car insurance that covered the deductible so I don’t have to pay anything out of pocket. I have to admit that this was one of the moments when I really appreciated credit cards. After all, the coverage cost me absolutely nothing except  the time it took to make that phone call. Just be sure that you contact them right away because there are time limits (usually around 45 days) after the accident in which you have to make a claim.

Your personal auto insurance is generally primary for any liability. That means the car rental company will probably charge your personal auto insurance before the rental insurance kicks in. If you have sufficient personal liability insurance (and I hope you do), the rental car insurance won’t be necessary at all. Even if you don’t, the rental car company has to provide a minimum level of liability insurance automatically so you’re only purchasing supplemental coverage above that.

For me, those two facts justify not purchasing the rental car insurance. The only advantage I would have had is that I wouldn’t have had to make a claim on my insurance at all if I had backed into a parking garage post or something like that since the loss damage waiver would have covered the damage to the car and I wouldn’t have needed any liability coverage. In those very limited circumstances, I wouldn’t have to worry about my insurance rates going up (the worst part of this whole thing) but the odds of that happening just don’t make it worth the cost for me.

So when should you purchase the insurance? I can think of a couple of situations. One is if you don’t have car insurance (like my carless NYC friends). The other is if your rental falls under some of the exceptions to your personal auto insurance coverage of rental cars. For example, mine doesn’t cover long term rentals or business use if it’s rented under the company name so check the details of your insurance coverage. Oh, and one more thing: you might want to think twice about skipping the insurance if you’re traveling on Fri the 13th!



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  • avatarPaulaApril 24, 2012 at 11:39 amReply

    Great article! I think that the bottom line for any car renter is to carefully check out their options (and know any possible
    terms, conditions and restrictions of credit card or personal coverage) before they get to the rental counter!

  • avatarRheaSargent19April 28, 2012 at 3:16 amReply

    If you want to buy real estate, you would have to get the personal loans. Moreover, my brother commonly takes a bank loan, which supposes to be the most reliable.

  • avatarHilaryDelaney22April 30, 2012 at 11:08 amReply

    Some time before, I really needed to buy a good house for my firm but I didn’t earn enough money and couldn’t purchase something. Thank goodness my fellow suggested to try to get the business loans at banks. Thence, I acted that and used to be satisfied with my secured loan.

  • avatarCar Hire ExcessMay 1, 2012 at 5:05 amReply

    Well the things which are described by you are really beneficial. According to me as you is the owner of that car at that time, so you’re responsible for any type of damages such as an accident, car theft and parts stolen etc. You have to fulfill the losses of that car to the actual owner of that car or company from where you hired it.

  • avatarJohnnyMay 21, 2012 at 1:47 pmReply

    When renting a car, you have to be sure to read through their various options when it comes to insurance. They’re very careful about the way these options are worded.

  • avatarBuy to Let InsuranceJune 19, 2012 at 3:11 amReply

    This is a great article & informative also. Not only a car renter but every other renter also should carefully check out their options.

  • avatarBMF Wheels for SaleJune 26, 2012 at 6:44 amReply

    You sharing very useful for all. Everyone should at least once go through this posting to acquire general knowledge regarding transportation and road safety.

  • avatarHanukkah DecorationJune 28, 2012 at 11:27 pmReply

    Hey very nice information you have shared regarding car safety,

  • avataral AnelliDecember 8, 2012 at 9:35 amReply

    I learned one additional important fact. The insurance you have for your personal car is usually what is transferred to the rental. I had liability only on my personal vehicles because they are so cheap and I own them outright. When I totaled our renta car over Xmas, they my own insurance delayed for 60 days before telling me I would be responsible for the value of the car (they took care of the other driver car and injury). But the 60 day delay meant that my application and appeal to the credit card insurance was denied and re-denied. I will have to go bankrupt if they come after me because I don’t have the money, but I feel jilted because none of the insurance companies or renta car company told me to file EVERYWHERE asap, just in case, my insurance wasn’t enough. Hope that helps others.

  • avatarMatt FrielJune 17, 2014 at 10:45 amReply

    whoever wrote this has never been in any kind of accident with a rent a car and not had their insurance.
    If you don’t have their insurance they will bill your insurance and then they will try to bill you for a dimunition of value charge as well as a trumped up administrative charge.

    Roll in the credit card that made you have a false sense of security. They will act like they are acting on your behalf and offer a meager amount of money to close the claim with the rent a car company or their agent, who will not accept. Net pay out of Credit Card is zero and your credit is ruined, unless it is enterprise renta car that actually puts a power of attorney over your credit card

    • avatarErik CarterJuly 1, 2014 at 3:55 pmReply

      All I can speak to is my experience with this particular credit card and rental car agency. In this case, the credit card company covered my out-of-pocket costs.

      • avatarM.AndalAugust 13, 2014 at 1:00 pmReply

        Hi Erik,

        I am in a similar situation but my Costco Amex card based their deductible on my personal auto insurance’s deductible. Which credit card do you use when renting cars? I may have to get that.

        Thanks for the article, it’s very informative.

  • avatarLong Term Car RentalAugust 25, 2014 at 6:09 amReply

    Hey, Great tips! Thank you

  • avatarChelseaMay 12, 2015 at 3:02 pmReply

    I have been in an accident and I too, did like you and used my credit card which paid my deductible, but then my premium went up because I had to file a claim. The claim it was due to area changes, but I know that was a lie.. My friend got into an accident in a rental but that was the one time she bought the rental insurance and she didn’t have to pay a deductible or even file a claim. So now I always get the rental insurance because I can’t afford for my premium to change again, but then again I rarely rent a car.

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