Before you accept or decline insurance when you rent the car, find out what is, and more importantly, what is not, covered under the different policies.
If you have ever rented a car, you may have been asked that question. And if you’re like many customers, you may not know the answer. You need to make sure you’re protected, but you may already be adequately covered by your auto insurance policy, credit card or other policies.
So when should you say “Yes” and when can you confidently say, “No thanks, I have coverage”? Start by answering a few questions, before you get to the counter.
1. Does your current auto insurance policy cover rental cars?
If you already have auto insurance, review your policy or ask your insurer about coverage and ask the following questions:
- Does this policy cover rental cars?
- Who and what does your policy cover? Can someone else drive the vehicle? Does coverage extend beyond collision damage to liability insurance, personal property, theft, etc.?
- Is the coverage adequate for the type of vehicle you plan to rent?
- Does your current policy serve as the primary insurance on the rental car?
- Most policies have a deductible, an amount you must pay before coverage kicks in. What is your policy deductible, and is it the same for rental cars?
2. Does your credit card offer collision damage waiver insurance for rental cars?
Many credit cards, including all personal Bank of America credit cards, offer some coverage for rental cars. (This coverage is secondary if you already have a personal auto insurance policy.) Call your card issuer, or review your card’s guide to benefits, for specific conditions, exclusions and terms. For example, certain types of vehicles may not be covered.
Credit cards that have this benefit typically cover physical damage, or theft of the rental vehicle, with no deductible. If you are in an accident, any damage to the rental car is covered, as long as the rental agency verifies the losses and coordinates with the benefit provider. However, most cards do not cover damage to other cars or property, or any liability that arises, including damage to third parties.
To qualify for your credit card coverage, you’ll usually need to reserve and pay with the card. You will also need to decline the rental agency’s collision damage waiver, as well as any coverage offers you receive from third parties at the time you reserve the car.
Some rental agencies require a letter of eligibility when you use your credit card for coverage. Check with your card issuer to find out how you can get one if needed. Also confirm how the coverage works if someone else will be driving the car. Most credit card coverage is extended to all drivers authorized by the rental car company, but you’ll need to check to be sure.
3. When does it make sense to buy insurance from the rental company?
If you have coverage through your credit card or personal auto insurance, consider whether you want any additional insurance offered by the rental car company. You may be able to opt for supplemental liability insurance if you are not covered by a personal policy. Or, maybe buy personal effects insurance if you’re concerned about items being stolen from your rental car (although homeowners and rental insurance often cover this type of theft).
If your credit card or personal insurance policies provide adequate coverage, it may not be worth the extra expense. But if you decide to buy insurance from the rental company, be sure to ask about the terms and conditions. What does it cover? Which drivers? What is not included?
Whatever your decision, when renting a car it is crucial to ultimately understand what you are paying for and what you are responsible for.
