Car rental insurance hotwire
There are more options for renting a car than ever before. In the past, you simply selected a vehicle from one of the many brick-and-mortar car rental companies found at airports, train stations or other locations. Today, technology has made possible other alternatives, including peer-to-peer car services, which enable consumers to rent personally owned cars from others; and car sharing programs in which—for a monthly or annual fee—consumers can pick up a vehicle at a wide range of locations for periods ranging from minutes to days.
While these car rental options mean more choice for consumers, they mean more questions about insurance coverage. Fortunately, it is possible to be properly insured when renting a car without wasting money by purchasing duplicative coverage.
The insurance coverage offered by traditional car rental companies is fairly standardized. However, coverage varies widely amongst other types of car sharing programs. The most important step is to read the car rental/sharing agreement—most companies clearly state what is covered as well as the supplemental coverage that can be purchased.
Regardless of the rental car option, the I.I.I. suggests making two phone calls:
The first, to your insurance company, to find out how much coverage you currently have on your own car. In most cases, whatever coverage and deductibles you have on your own car would apply when you rent a car (providing you are using the rental car for recreation and not for business).
- If you have dropped either collision or comprehensive on your own car as a way to reduce costs, you may not be covered if your rental car is stolen or damaged. Insurance rules vary by state, so it is best to check with your insurance professional for the specifics of your policy.
- Check to see whether your insurance company pays for—or provides a rider for—administrative fees, loss of use or towing charges.
The second, to your credit card company. Insurance benefits offered by credit card companies differ depending on the company and/or the bank that issues the card, and the level of credit card used (a platinum card may offer more insurance coverage than a gold card). However, most credit card only provide limited coverage, such as covering the deductible if there is a claim.
- To know exactly the type and amount of insurance that is included, call the toll-free number on the back of the credit card you will be using to rent the car. If you are depending on a credit card for insurance protection, ask the credit card company or bank to send you their coverage information in writing.
- In most cases, credit card benefits are secondary to either your personal insurance policy or the insurance coverage offered by the rental car company.
Brick-and-Mortar Car Rental Insurance
Consumers renting from traditional car rental companies can generally choose from the following coverages (Note: insurance is state-regulated; the cost and coverage will vary from state to state.):
- Loss Damage Waiver (LDW) Also referred to as a collision damage waiver, an LDW is not technically an insurance product—it is designed to relieve or “waive” renters of financial responsibility if their rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges for the time a damaged car cannot be used because it is being fixed. An LDW may also cover towing and administrative fees. The Loss Damage Waiver may become void if the accident was caused by speeding, driving on unpaved roads or driving while intoxicated.Comprehensive/collision auto coverage generally covers damage to a rental car. Keep in mind, however, that in most states diminished value is not covered by personal auto insurance policies.
- Liability Insurance By law, rental companies must provide the state required minimum amount of liability insurance coverage—generally this figure is low and does not provide much protection. (See State minimums here.)A standard auto insurance policy includes liability coverage. For additional protection, consider an umbrella liability policy. Non car-owners who are frequent renters can also purchase a non-owner liability policy, which not only provides liability protection when renting a car, but also when borrowing someone else’s car.
- Personal Accident Insurance This covers the driver and passengers for medical and ambulance bills for injuries caused in a car crash Health insurance or the personal injury protection (PIP) provided by your auto insurance will likely cover medical expenses.
- Personal Effects Coverage This provides insurance protection for the theft of items from a rental car.A homeowners or renters insurance policy includes off-premises theft coverage. If you frequently travel with expensive items such as jewelry, cameras, musical instruments or sports equipment, consider a personal articles floater to protect your valuables at home and while traveling.
Car Sharing and Peer-to-Peer Car Rental Insurance
The insurance offered by these companies is not standardized. It is therefore important to go to the company’s website to read the insurance coverage information carefully. If you have any questions, call the customer service number listed on the website. And contact your auto insurer if you feel you need more information to make an educated insurance coverage decision.
Car sharing programs like ZipCar, generally include insurance costs in the fee. However, if the car is involved in a collision or is stolen, the renter may be billed for a specific dollar amount that is stated in the membership agreement. For an additional cost, customers can purchase a “waiver” to avoid paying the accident fee. Car renters under the age 21 should read the insurance coverage carefully as many programs limit coverage for young drivers to the minimum state required amount of liability. Young renters can look into whether their parents’ auto insurance would cover them for the difference, or purchasing their own non-owner liability policy.
A number of web-based peer-to-peer rental services (e.g. RelayRides) offer both basic coverage and supplemental insurance. The supplemental insurance includes both coverage for damage to the car and liability protection, and provides a choice of coverage amounts and deductibles. Renters who do not purchase the additional insurance are required to sign an agreement stating that they declined the coverage.
One of the most frequently repeated bits of travel advice is to avoid being coerced into paying extra for additional rental car insurance. When you pay with a credit card, you are usually covered by the policy that is included by the network that your card is affiliated with.
This advice, while generally true, glosses over a much more complicated insurance picture.
Many travelers think that they are covered by their credit card’s policy only to find out after a car accident that they were not.
Here are six common situations where you might think you are covered, but you’re really not.
1. Sorry, that Kind of Car Is Excluded
The rental car insurance that comes with your credit card has a long list of vehicles that are excluded. Many exclude exotic cars like Ferraris and Bentleys. But what about a Ford pickup truck? I once got upgraded to a Ford pickup when the company was out of the class of car I rented. Only later did I realize that my credit card excluded any vehicle with an open cargo bed or anything that may be considered a truck. Certain vans are excluded as well. Other policies exclude popular sports cars like the Ford Mustang, which are commonly part of rental car fleets.
What You Should Do
Familiarize yourself with the terms of the rental car insurance you are planning to use. Reserve a car that meets that definition and refuse an upgrade to a vehicle that is excluded.
2. No Coverage in that Country
You might not expect to be covered when you rent a car in a rough and tumble part of the world racked by violence and lawlessness, but how about countries like Italy? Since the fall of Mussolini, Italy has been a fairly peaceful place, but for whatever reason, credit cards seem to have a problem providing their insurance there, along with a few other popular tourist destinations. In addition to Italy, Ireland, Northern Ireland and Israel are all excluded from the coverage of Visa, MasterCard, American Express and Diner’s Club. The same is true for Jamaica, New Zealand, and in some cases, Australia.
What You Should Do
The Discover More credit card offers rental car insurance to vehicles rented anywhere in the world, except where prohibited by law. If you do not have a Discover card, or it is not accepted at your destination, you can still look for a rental car company that includes a collision damage waiver or offers car insurance for a reasonable price.
3. That Road Doesn’t Count
It is quite difficult to find a copy of the rental car insurance policies that apply when you use your credit card. And even if you do manage to obtain a copy, there is nothing there that excludes coverage in the event that your vehicle is damaged while driving on a dirt road. What you will find is a clause that excludes coverage any time you are violating the terms of your rental car agreement. Sure enough, virtually every rental car agreement forbids you from driving on an unpaved road. More than half of the roads in the United States are unpaved, and you can even rent a car in rural areas where almost every road is unpaved. Nevertheless, your credit card’s insurance company will deny your claim if an accident occurs on an unpaved road.
What You Should Do
Unless you can obtain written authorization from your rental car company to drive on an unpaved road, even purchasing their insurance probably will not help you. If you are renting near a national park or another tourist attraction featuring unpaved roads, there may be a local rental car company that will not forbid its use there. Otherwise, avoid all unpaved roads in a rental car or at the very least, use extreme caution.
4. No Coverage with a Loyalty Award Program
I am big fan of loyalty programs and award travel, but I will never redeem a rental car award. The key to the rental car insurance from your credit card is that you must reserve and pay for the entire rental using your card. If you redeem an award for a free rental from your airline program or even the rental car company itself, and you are on your own.
What You Should Do
Save your points and miles for airline tickets or hotel rooms, as the cost of added insurance will negate the value of the reward.
5. Congratulations, You Are Covered, But..
You’ve avoided renting a pickup truck in Jamaica with your frequent flier miles so that you can drive off road, but you still had an accident. You paid for your compact car with your credit card and it was damaged on a paved road, here in the United States.
Think you’re off the hook? Don’t get too comfortable with that insurance agreement.
The rental car company will still try its best to hit you up for administrative fees and loss of use. They will stand by the fictitious idea that all their cars are rented out all of the time, and renting out a car with a ding in the door is just not possible. So, each precious day that they can claim they weren’t renting out their valuable car, they will bill you for their highest rental rate. Then, they will add hundreds of dollars of administrative costs. If you’re counting on your credit card company to cover those charges and jump to your rescue, you might be shocked when they shrug their collective shoulders and tell you that those charges are not covered.
What You Should Do
Not every credit card company excludes loss of use and administrative fees. Visa’s contract does appear to cover such charges. Otherwise, you may consider such charges to be the deductible that you will be responsible for, in the event of an accident.
Despite all of these scary exclusions that I have discovered, I have yet to be a victim of any of them, as I have never actually damaged a rental car. That said, I’m sure my day will come. And when it does, I hope that I will have enough knowledge of the way credit card insurance coverage works, so that I won’t be denied my claim.
Have you been denied a car rental insurance claim from a credit card company? Why was your claim denied? Do you have a favorite insurance coverage from big name credit card companies? Share your thoughts and experiences in the comments below.Tweet
Rental Car Insurance Coverage
There are many questions about and conflicting opinions on rental car insurance. It's important to do your research. Common questions include:
- Do I really need to purchase damage waivers at the rental counter?
- Am already covered by my personal auto's policy?
- Doesn't my credit card offer coverage for a rental car?
Rental car insurance rates are expensive! It sometimes costs more per day than the rate on the rental vehicle itself! Many renters are unsure about what to do when it comes to accepting or declining an agency's coverages and waivers.
Most of the indecision comes from not knowing what their personal or business auto insurance covers while they are renting a vehicle. Many people assume that they have auto insurance for a rental car through their credit card.
The renter of a car is fully responsible for any loss (theft) of the vehicle as well as any damage that occurs to the vehicle during your rental period.
I will provide information and tips on each area of car rental insurance, either using your own or purchasing coverage from the rental companies, in each of the following links.
Before you purchase or decline coverage, you should first check
Your Personal Auto Insurance Coverages
Find out what you need to know about whether or not your own personal automobile insurance coverage extends to your rental car.
Your Possible Credit Card Coverages
Some credit cards provide a certain type of rental car insurance coverage. It's important to know if you have coverage and if there are any restrictions.
If you are currently looking for insurance coverage for your personal vehicle and would like more info, then visit www.auto-insurance-knowledge.com
If you've decided that your existing personal automobile insurance coverage is not fully adequate, you'll be faced with a variety of products to purchase.
Buying Rental Car Insurance
Here are the basic types of optional auto rental insurance coverage, and waivers, that are offered by most major car rental companies. Click for more informatin on:
SLI (supplemental liability insurance) or ALI (Additional Liability Insurance)
CDW (collision damage waiver) and LDW (loss damage waiver).
PAI, PEC and/or PEP (Personal Accident Insurance and Personal Effects Coverage or Protection)
The bottom line is check into everything!!
If you don’t need to purchase the optional auto insurance for a rental car, you will certainly save money, but only if you are truly covered.
Making sure that you are well-informed about rental car insurance, will help you to make educated decisions that are in your own best interest -- you don't want any unpleasant surprises if you happen to be involved in any type of accident or incident with the vehicle that you've rented.
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