Car rental insurance: vital or scam?

November 2, 2009 2:50 PM

Car rental insurance: what should I get?

- I don't have any primary auto insurance (don't own a car).
- This is just in the states (NY, NJ, PA)
- I am renting via my credit card which has Master Rental Insurance (http://www.citibank.com/us/cards/gen-content/en.htm). They said on the phone that they become the primary insurer since I don't have auto insurance, that it is the same category (damage/loss... mentioned in that document as well).

Does this mean I just need to worry about hitting someone else?

I don't understand the various insurance labels and want to be as well informed as possible when I get to the counter. I hate feeling pressured or like they are taking advantage of me.

Thanks for your help-
cgs

posted by cgs to travel & transportation (15 comments total)

Sadly, I know from personal experience that they may pressure you or attempt to take advantage. It's possible that the salesman will have been specifically instructed to do this. Just stand your ground and decline to buy any insurance they offer you, and they will move on.

Remember, if you do hit another car, try to be co-operative and helpful, but never admit fault and never apologise. Call 1-800-MC-ASSIST immediately.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 3:03 PM on November 2

If you read it, the only thing that the credit card covers is the Collision Damage Waiver(CDW).

This coverage is not all-inclusive, which means it does not cover such things as personal injury, personal liability, or personal property. It does not cover you for any damages to other vehicles or property. It does not cover you for any injury to any party.

Thus if you want those things, you need to buy them. I too don't have a car, and I purchase everything except the CDW from the rental place. You can also buy a non-owner's policy from an insurance agency which will cover all of this. However, I think you have to buy it for 6 months or a year. The insurance charges are normally around $20-$30 dollars a day on top of the car rental cost. Not getting the CDW saves around $10-$15 a day.
posted by GregorWill at 4:11 PM on November 2 [1 favorite has favorites]

GregorWill is right- you need one of those two things, and your credit card only covers the CDW.

For posterity, if you have regular auto insurance, it almost always covers the other stuff.
posted by gjc at 4:33 PM on November 2

There's a lot of margin in the insurance add-ons that the car rental agencies sell you when you rent a car. They know the vast majority of people that rent their car will not get in an accident so there's a huge motivation for them to try and get you to buy it because it is like free money to them.

Unless you're feeling unlucky or are a shitty driver, you can probably just make due with the coverage from the credit card.* I always decline the coverage from the rental car company. But then again, I also have auto insurance on my car so there's that safety net. But in the hundreds of cars I've rented and the 10s of thousands of miles I've driven I've only had one problem where some road debris flew up and put a nice dent in the hood of a car. Hertz sent me a bill for $800 to fix it and I sent that to my insurance company and because it was covered with my basic liability coverage there was zero deductible and it didn't hurt my insurance rates. I called the credit card company and they were very nice and pretty much said they'd pay for anything my insurance company didn't cover so long as I sent in the paperwork. It turned out my insurance paid 100% so there was no problem.

*But insurance is all about peace of mind, so if you'd sleep better (and maybe drive better) knowing you are covered, take the insurance and consider the added cost just part of the deal.
posted by birdherder at 4:44 PM on November 2

Because I didn't know any better, I didn't do any of the above when I rented a compact car for six days. I put on very few miles yet wound up with a $469 bill! At the time, I didn't own a car either, therefore had no primary auto insurance. Car renter without existing auto insurance beware!
posted by Elsie at 4:58 PM on November 2

The risk of damaging the rental car, which is all your credit card covers, is trivial. Depending on the make and size of the car, your maximum exposure is the price of a new car. That's nothing compared to the risk of hurting someone else you take *every time you drive,* no matter how good a driver you are. You could *easily* cause a million dollars in damage to other people's property or bodies. One decent collision could bankrupt you, if you have any other assets worth protecting. The rental company may carry state-mandated minimum liability on the car itself, in some states, but that won't begin to cover the very real risks you take just by driving out of the lot.

Understand this: your credit card offers NO protection for liability for damage or injury to others. None. You are completely assuming that risk if you "decline all coverage," unless you are *sure* your current auto policy applies fully to a rental (and you don't have one).

You would be nuts not to pay the 12-18 bucks a day for extended liability coverage in your situation, with no other auto policy. It sucks, but the downside risk is SO extreme, and most people just do not understand this rationally.

You might not even be at fault but still wind up liable for damages to other people's health and property. You might accidentally back into a wall and do 100K worth of damage to a structure. Think about it, and pay the extra few bucks.
posted by fourcheesemac at 5:18 PM on November 2 [1 favorite has favorites]

PS -- you sometimes have to convince the agent that they sell a liability only (not including "CDW") policy. But most of the majors do. Hertz, from whom I always rent, definitely does, at about $12-15 a day in most places. So it costs 60 bucks for the weekend over the car rental.

You could save your entire financial future with that 60 bucks Way better odds that you will need that coverage than that you will win a lottery. Nearly all drivers, no matter how good, eventually have a serious accident, and often one where they are at least partially at fault.

A single ER visit by ambulance can run into tens of thousands of dollars. The guy you hit complains of a stiff neck and they have to helicopter him to a city 100 miles away to be seen by a trauma specialist? Could be 30K . Someone breaks a bone and spends 3 or 4 days in the hospital? Could be 30K.

Spend the few extra bucks.
posted by fourcheesemac at 5:23 PM on November 2

ok, fourcheesemac.. you convinced me :-)
posted by cgs at 5:49 PM on November 2

Heck, you could scratch a Mercedes in a parking lot and be out two grand in a heartbeat.

Glad you see the logic.
posted by fourcheesemac at 6:02 PM on November 2

Some people have commented so far that the credit card only covers you for damage to the vehicle you are driving. Generally this is true. However, whether you are covered for anything else varies depending upon the jurisdiction. In some states, the rental car company is required to cover those driving its vehicles for personal liability. Therefore, if you rent in one of these states and you hit somebody and injure him, the rental car company (or its insurance) will cover you. On the other hand, in other places the rental car company is not required to cover you in these circumstances, so if you hit somebody and injure him you are on your own.

Even where the state requires the rental car company to cover you, you might not consider the amount of coverage offered to be high enough.

In other words, if you really want a good answer to this question you have to check the laws where you are renting. I have looked for a good website that summarizes these issues on a state-by-state basis, but so far I have not found anything.
posted by massysett at 7:07 PM on November 2

Just in case you have AmEx - or perhaps it can be useful to someone who has AmEx - you can enable the Premium Car Rental Protection option. This mitigates the problem of hitting someone and being responsible for medical bills. I'd provide a link, but they all involve https - in short, for a one time flat fee of $18-$25 (depending on the state) charged to AmEx at the time of rental, it bypasses your primary car insurance (so you never deal with not having car insurance). I've done it every time I've rented a car, in CA it's $17.95 - although it may not be available in every state.

Copied from AmEx website:

"Key Features
One flat price of $24.95 per rental period, not per day ($17.95 for California Residents).
Coverage is primary. You won't have to file a claim with your personal insurance company and risk having your premiums increase.
There are no deductibles.
There is no cost to enroll and you will only be billed a premium when you use your enrolled Card to rent a car until your enrollment is terminated.
Coverage (for you and your passengers)
Up to $100,000 of primary coverage for damage or theft of a Rental Car.
Up to $100,000 of Accidental Death or Dismemberment coverage.
Up to $15,000 for excess medical expenses.
Protection
Coverage is worldwide, except for vehicles rented in Australia, Ireland, Israel, Italy, Jamaica, and New Zealand.
Coverage is for up to 42 consecutive days (up to 30 consecutive days for Washington State Cardmembers) and automatically extends to your other noncorporate American Express® Card accounts.
Covers most vehicles typically available from a Rental Company."
posted by VikingSword at 7:29 PM on November 2

You don't have to pay anything extra to have the state-mandated minimum insurance. In some states, the minimum insurance is laughably tiny, but it's worth thinking about.
posted by oaf at 9:20 PM on November 2

In some states -- Indiana is one -- car rental companies ARE NOT required to have minimum liability insurance at all. You are completely on your own.

When they do, however, it is almost laughably inadequate coverage (as is the Amex package described above, which is not really liability coverage either). Do you know how easy it is to do 100K worth of damage? 100K for "accidental death" is not going to pay the lawyers' fees.

Your major concerns are medical injuries to others and property damage to others. Many cars on the road cost 40K+. If you're responsible for a collision that totals 3 cars, there's your 100K right there, before even considering the cost of treating the injuries or compensating for deaths.

If you have personal assets of any substantial sort (or your family does, or your business if you're a business owner) you should be carrying much more auto liability coverage than 100K.
posted by fourcheesemac at 3:08 AM on November 3

The Amex coverage, btw, adds 100K for accidental death and 15K of medical coverage to what is already the basic coverage offered by most credit cards, for $25 per rental. I fail to see the value in that. Most rentals are for a week or less, and the vast majority for 3 days or less (other than accident replacement rentals, which are of course usually covered by the driver's collision coverage on her own car). For $15/day, approximately, or about 50 bucks for a weekend rental, here's what Hertz sells you in most states:

Liability Insurance Supplement (LIS) provides you with up to $1 million of increased protection should bodily injury and property damage claims be made against you by people injured in an accident. LIS safeguards your insurance policy and/or your personal assets for the first $1 million should such claims be made against you. LIS also provides you with up to $100,000 in coverage for combined bodily injury and/or property damage claims, should you be harmed by an uninsured/underinsured driver.

We haven't even discussed uninsured drivers and your own personal risk of injury or damage from them.
posted by fourcheesemac at 3:14 AM on November 3

Always remember, with insurance, penny wise is pound foolish.
posted by fourcheesemac at 3:22 AM on November 3