A Non-Car Owner’s Guide to Car Rental Insurance

plan-a-road-trip

When you hear the siren song of the open road, you just gotta go. But unless you’re hitchhiking or riding the rails, you first have to get a car. As someone who doesn’t own a car, I often rely on the kindness of others to get my kicks on Route 66. But sometimes the responsibility of driving  falls to me, which means a trip to the dreaded car rental counter and its myriad of deliberately intimidating insurance options and terminology.

I have yet to find a resource on car rental insurance that tells me anything other than “Use the same insurance policy that covers the car in your garage” or “Aren’t you covered by your husband’s policy?” So, like many brave women before me, I decided to write my own rules. Since I live in the US, this information is specific to the United States, though parts may be applicable to other countries.

Terminology

First things first: let’s get some terminology out of the way. Here are some common terms you’ll see when you’re signing your life away at the car rental counter:

Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): This waiver will cover any losses if the rental car is damaged or stolen. Typically, this applies only to your vehicle, not any other vehicles that you may have damaged. Some rental car companies like Hertz offer a Partial Damage Waiver (PDW) which is the same in theory as the CDW, but with less coverage. You may have a CDW through your credit card – there’s more on that below.

Deductible: If you get into an accident, the deductible is the amount you have to pay before the coverage kicks in. For example, if your insurance policy has a $1000 deductible, that means that all your expenses are covered once you pay the initial $1000. Many insurance policies have deductibles, but the amount may vary by rental company.

Personal Accident Insurance (PAI): Covers accidental death benefits and medical expenses if anyone dies or is injured in your rental car.

Supplemental Liability Policy (SLP) or Supplemental Liability Insurance (SLI): In many states, car rental companies are legally required to provide minimum liability coverage as part of any rental. SLP is liability coverage on top of liability coverage, and the dollar amount covered may be greater than the minimum liability coverage.

Third-Party Liability Insurance: This type of policy is designed to protect the driver of the rental car if he or she gets in an accident and is sued by an injured person.

Another important thing to note is that all of these policies are null and void if you don’t meet the terms of the agreement. Examples of not meeting the terms of the agreement include driving under the influence of alcohol or drugs, letting an unauthorized person drive the car, or driving in a place where the car is not covered by your rental insurance (including specific places or countries designated by the insurance company).

But I Thought My Credit Card Covered Me

Many people assume because their credit card offers car rental coverage that it covers everything. This is a dangerous assumption, especially for people who don’t own cars and haven’t got the safety net of an auto insurance policy. My credit card of choice is the Chase Sapphire, so I’ll be using it as an example. Insurance coverage and terms will vary from card to card. (FYI: I am not getting paid to mention this card – it’s just the one with which I’m most familiar.)

Here’s the skinny on things to consider when using the car rental insurance that comes with your credit card:

  • What does it cover? This, this, THIS is the most important question you can ask. For example, Chase Sapphire covers theft and collision. It does not cover liability. So if I have a rental car and I hit someone (or something), I still may be liable for damages even though I have insurance through my credit card.
  • Is the coverage primary or secondary? My example, Chase Sapphire, is one of the few credit cards that offers primary coverage. What does this mean? Primary coverage functions more like traditional car insurance – you get in an accident and you’re covered by your credit card like an insurance company. Secondary coverage requires you to submit a claim to your insurance company (if you have one) and then submit it to the credit card company to cover the remainder.

So what happens if your credit card only offers secondary coverage and you have no insurance company with whom to file a claim? A very kind woman at Chase explained to me that if I have no auto insurance of my own, the secondary insurance would be treated as primary. However, it is important to research just exactly what the secondary insurance will cover – the benefits may not be the same as primary.

  • What conditions do I have to meet to get car rental insurance via my credit card? Most credit cards have specific requirements for procuring their car rental insurance. In addition to adhering to the rules of the road, Chase Sapphire requires that you pay for the rental car in full using your card. You must also decline the car rental agency’s insurance. That’s right – no double dipping.
  • What’s the deductible? How much do you have to pay before the insurance takes over? If you get in an accident, what’s your minimum cost?
  • Does the coverage exclude any countries? Sometimes policies will exclude certain countries from coverage. For example, Jamaica and New Zealand are excluded quite frequently.
  • Does the coverage exclude any vehicles? Many credit-card-based policies won’t cover vehicles such as trucks, motorcycles or fancy, antique or exotic cars.
  • Is there a duration limit on the coverage? Chase Sapphire limits the use their car rental insurance to 31 consecutive days, both inside and outside the US. Other credit cards may differ. Often, credit card companies offer a longer time period outside the US than in the country.

What About Car Share Programs Like Enterprise CarShare or Zipcar?

Enterprise CarShare includes basic physical damage and liability protection in its hourly rates. Depending on the state where you rent the car, it may also offer users the chance to purchase separate, additional options for CDW and SLP. 

Zipcar’s coverage offers third-party auto liability coverage and Personal Injury Protection (PIP) or “no fault” coverage with its hourly rates, depending on the state in which you rent the car. “No-fault” coverage means that the insurance company covers customer damages in an accident, no matter whose fault the accident is. Drivers also have the option to purchase an additional Damage Fee Waiver, which basically waives the deductible if something should happen.

Both companies have deductibles that must be met before their insurance kicks in.

A call to Chase Sapphire confirmed that their CDW policy applies to hourly car share programs in addition to traditional rental car companies.

Non-Owner Auto Insurance

If you find yourself renting cars frequently, you may want to consider non-owner auto insurance. This policy offers liability coverage for drivers who don’t own cars. It may be cheaper than buying the rental car company’s insurance every time you rent. It also offers coverage for car share programs in addition to the coverage included as part of the hourly rental and may be useful if you frequently borrow a friend’s car. Non-owner insurance is available through carriers like Geico and State Farm.

Go Forth and Rent! 

From collision damage waivers to credit card coverage to car shares, you are now armed with enough knowledge to make any Enterprise management trainee quake in his wingtips. Use it wisely, and see you on the open road!

– KATHY

 

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