Understanding Car Rental Insurance Options

1. Understanding Loss of Use

Budget travelers might say that paying extra for insurance from the company is among the most common car rental mistakes. Moreover, rental companies have found a way to cast doubt on that decision to decline coverage through a charge known as “loss of use.” If you have an accident with a rented car, that vehicle is likely to be out of commission for several days as repairs are made.

Subsequently, rental companies are now asking for reimbursement of the lost revenue that vehicle would have generated had it not been in a garage for repairs. If you’re at fault in the accident, most rental companies will expect you or your insurer to cover this loss, which typically amounts to the standard daily rental fee multiplied by the number of days the damaged car is out of commission.

This creates an objection that representatives often present when you decline their expensive insurance in an attempt to save money on car rentals. If you mention that your personal auto insurance covers the rental, they may assert that it’s unlikely the loss of use costs are included, and unfortunately, they might be correct.

Because it’s a relatively new charge, there’s a chance that your policy, accepted many years ago, does not cover the loss of use. However, do not be discouraged in your attempts to secure the best rental rates. Buying the car rental company’s often overpriced policy is not your only option. Therefore, read on to discover some possible strategies for car rental insurance.

2. Credit Card Coverage Explained

The vast majority of car rentals are secured using a credit card. However, which card will you be using? Many Visa, MasterCard, and American Express cards provide car rental insurance coverage that includes protection for loss of use claims. Nevertheless, this is a broad statement that requires further investigation.

First and foremost, you must use the card to book the rental. Merely having an account with the credit card company will not suffice. Secondly, verify that your specific card issuer provides coverage. Often, this can be done quickly online or via a phone call to the customer service number on your card. It’s important to avoid making assumptions, as this type of coverage is not standardized and varies between companies.

It is wise to make this inquiry in a relaxed environment, where you are not under pressure to agree to expensive insurance at the rental counter. Remember this general rule: Credit card car rental coverage may cover collision costs but rarely, if ever, provides liability coverage.

3. When to Accept Rental Company’s Coverage

The Loss of Use clause might be absent from your auto insurance policy or from your credit card coverage. In such cases, you will need to assess the risks involved. Loss of Use could amount to less money than the deductible on your policy. Unless extensive repairs are needed, this expense will likely stay under $1,500, making it a risk worth considering.

Nevertheless, there are instances when it’s advisable to override conventional wisdom and opt for the rental company’s insurance coverage. Those without personal auto insurance should closely examine the coverage offered by the rental company. Even those with auto insurance and a few accidents on their records need to do the same.

Why is this important? Car rental companies typically self-insure their vehicles, contracting for repair work without involving an insurance provider. Thus, they are able to secure favorable rates from vendors who appreciate volume business, meaning they may not report your accident to insurance companies. Although it might eventually appear on a police report, it’s less likely to be flagged as a claim.

It’s also crucial to consider accepting the company’s coverage if you’re renting a vehicle outside your home country. Regular auto insurance policies rarely cover international rentals, and credit card coverage often excludes popular tourist destinations such as Ireland, Mexico, and Israel.