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Know Your Auto Rental Insurance Options Before You Buy

Getting information about whether or not you need any additional insurance on an auto rental is as important as packing your swimsuit.

Dan Tratensek rents more than 50 cars each year while traveling for the National Retail Hardware Association. While his destinations vary from domestic locations such as Georgia to international ones like Germany, there’s one thing Tratensek never waivers on: whether to purchase additional coverage at the rental counter. “Never,” he says.

“For the first year I traveled, I tended to buy car-rental insurance because I didn’t know any better, and the agents made it sound as if you don’t have any coverage outside of what they can offer you,” he says.

After making a few calls, Tratensek learned that his corporate American Express card, his personal automobile policy and his company’s insurance policy all covered the rentals. “I think the rental agencies certainly make a good deal of money on insurance, and less-seasoned travelers probably don’t know any better,” Tratensek says.

Last year, American car rental agencies brought in more than $22 billion in revenue, a 15-percent increase since 2001, according to Auto Rental News.  A lack of knowledge about rental insurance and other rental product options can cost travelers as much as $42 extra per day — often more than twice the cost of the rental itself, according to the Insurance Information Institute.

“Whether to buy rental-car insurance should not be a snap decision,” says Loretta Waters, vice president of the New York-based Institute.

“Some renters either purchase all the coverage, or they decline without knowing if they are covered by other policies, resulting in the consumer either wasting money by purchasing unnecessary coverage or being dangerously underinsured.”

While packing a swimsuit is important, knowing your coverage level is more so, but many travelers fail to put it on their to-do lists. If you have an auto policy, call your agent and ask if its protection extends to rentals. Also ask which drivers in your household it covers and what kind of damage qualifies, and get it in writing.

“In most cases, whatever coverage and deductibles you have on your own car would apply when you rent, providing you’re using the car for pleasure and not business,” Waters says. “If you’ve dropped either comprehensive or collision on your own car as a way to reduce costs, you won’t be covered if your rental car is stolen or damaged.”

Frequent travelers who don’t own a vehicle may want to purchase a non-owner liability policy, which costs $200 to $300 annually. “This not only provides liability protection when you rent a car but also when you borrow someone else’s car,” Waters says.

Next, call the credit card company you’ll use to pay for the rental. “Find out if they extend coverage, how it works, what it covers and what it doesn’t,” says Monica Beaupre of American Express Travel.

Finally, check to see if your homeowners policy covers stolen personal items. If you’re traveling on business, ask your employer what its policies cover. Even after doing the legwork, you may want to purchase coverage under certain circumstances.

“Our customers tell us that many of our coverages offer peace of mind when they’re traveling in an unfamiliar city or in a vehicle they’re not used to,” says Christine Conrad, a vice president at St. Louis-based Enterprise Rent-A-Car, which is the largest car rental company in North America.

Conrad says the claims process is simple. “We would fill out an accident report to get the facts of what happened,” she explains. “The customer would then return the keys and be on his or her way.”

That was Kris Monsen’s experience. He purchased “no-fault” insurance to cover the Audi A4 he rented from Hertz on a recent trip to Germany. He scraped one side of the car in a parking garage. “There was cosmetic body-panel damage, which is expensive to repair,” says Monsen, a semiconductor chip designer in Los Altos, Calif.

He later saw a $1,100 charge on his statement. “I wrote a letter and described the exact chain of events, how I followed the rental agreement procedure, and within a couple of weeks, the charge was reversed.” Although pleased with his overseas experience, Monsen doesn’t buy extra insurance stateside. “I rely on my normal automobile insurance plus whatever the credit card provides,” he says. “Fortunately, I haven’t had any incidents that tested the system.”

Mike Pina of AAA Motor Club, which has an exclusive relationship with Hertz, says customers should come prepared by educating themselves about available policies but shouldn’t worry about high-pressure sales tactics at the counter of any major renter.

“They have the responsibility to offer customers the opportunity to be protected from liability when they rent a vehicle, but [most] do not resort to pressure sales tactics,” he says.

Two former Enterprise employees, who asked not to be identified, disagreed. One former corporate accounts manager says policies were difficult to sell because they often ended up costing more than the rental itself.

“I said several times to my managers that I didn’t feel comfortable selling the policies,” says the woman, who left Enterprise last August. “But if you don’t sell them, you’ll be fired.”

According to Conrad, Enterprise judges an employee’s performance comprehensively. “An employee’s success, or lack of success, is based on their whole performance,” she says.  “Essentially, the sum of all parts.”

However, she adds, “Any products offered are always optional. In fact, all the signage posted in our branches says: ‘Before deciding to purchase any optional products, you may wish to determine whether your personal insurance or credit card provides you coverage during the rental period.’”

The former employees say they do see the policies’ potential value. “The first time you see someone who paid the $14 damage waiver total a car, [you see] it’s worth it, says the ex-manager. The other ex-employee agrees. “Many times, I sold the products to people who totaled the rental and walked away scot-free,” he says.

Tratensek says it all comes down to the individual. “If you feel comfortable paying the extra $20 for peace of mind, then do it,” he says. “But if I look at how much I spend on rental cars a year and double it, there’s no way I would.”

Get to know these auto rental insurance terms

Here is the most common additional coverage available at the rental counter and the average cost per day.

Collision Damage Waiver (CDW)   Relieves renters of responsibility if the car is damaged or stolen. Also called loss damage waivers (LDW), in most cases, they pay for loss of a damaged car’s use while it’s being repaired. However, they may become void if the damage resulted from the driver’s gross negligence — drunken driving, for example. If you already carry comprehensive and collision insurance, you probably don’t need this protection.

Cost: $9 to $19

Supplemental Liability Protection (SLP)   Provides up to $1 million of protection. By law, rental companies must provide the state-required amount, but if you’re adequately covered on your car, consider forgoing this option.

Cost: $7 to $14

Personal Accident Insurance (PAI)   Covers you and your passengers for medical bills from crash-related injuries. With adequate health insurance or personal injury protection under your car’s policy, PAI may be unnecessary.

Cost: $1 to $5

Personal Effects Coverage (PEC)   Insures the value of personal items stolen from your car. However, these items might already be covered under your homeowners or renters insurance policy. People who frequently travel with expensive items such as jewelry or sports equipment might be better off purchasing a floater under their own policy.

Cost: $1 to $4

Active Insurance is a Chicago car insurance agency that provides auto insurance options to fit the needs of Illinois drivers. Contact us for more information about rental car insurance and car insurance in Chicago.

*This article was originally published by Shelly Towns on Angie’s List.

*Image Source: www.ggaig.com