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.

Here are some common terms you’ll see at the car rental counter:

Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): This waiver covers losses if the rental car is damaged or stolen. Typically, this covers only your vehicle, not any other vehicles or property you may have damaged. You may have a CDW through your credit card – there’s more on that below.

Deductible: The amount you have to pay before you are reimbursed for damages. For example, if your policy has a $1000 deductible, your expenses are reimbursed after you pay the initial $1000. If your expenses are below $1000, you receive no reimbursement. Deductible amounts vary by policy.

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 policy protects the rental car driver if he or she gets in an accident and is sued by an injured person.

Please note is that all of these policies are null and void if you don’t meet the terms of their agreements. 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 the rental insurance, including specific regions or countries designated by the insurance company.

It’s also important to remember that insurance laws vary by state.

 Car Rental Insurance Through Credit Cards

Many people assume that car rental coverage offered through their credit card 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.

Here are questions to ask when using car rental insurance issued through a credit card:

  • What does it cover? This is the most important question you can ask. For example, my credit card covers theft and collision. It does not cover liability. So if I have a rental car and I cause an accident, I still may be liable for damages even though I have insurance through my credit card.
  • Is the coverage primary or secondary? Primary coverage functions more like traditional car insurance – you get in an accident and file a claim with your credit card like an insurance company. Secondary coverage requires you to submit a claim to your insurance company and then submit it to the credit card company to cover the remainder.
  • But what if your card only offers secondary coverage and don’t have a separate car insurance policy? According to a customer representative from a credit card company, if you don’t have a separate car insurance policy, the secondary insurance is treated as primary. However, it is important to research exactly what the secondary insurance covers – the benefits may not be the same as primary.

  • What conditions do I have to meet for car rental insurance? Most credit cards have specific requirements for procuring their car rental insurance. These may include paying in full for the rental car using your card and declining the car rental agency’s insurance.
  • What’s the deductible? If you get in an accident, what’s your minimum cost before getting reimbursed?
  • Does the coverage exclude any countries? Sometimes policies will exclude certain regions or countries from coverage. Check with your credit card company for specifics.
  • Does the coverage exclude any vehicles? Many credit-card-based policies won’t cover vehicles such as trucks, motorcycles, or antique or exotic cars.
  • Is there a duration limit on the coverage? Some cards set limits on the consecutive number of days that you can use their insurance. The duration may differ depending on if you’re renting inside or outside of the U.S. Check your credit card company for particulars.

Car Share Programs

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 offers third-party auto liability coverage and Personal Injury Protection (PIP) or “no fault” coverage with its hourly rates, depending on the state where 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 may also purchase an additional damage fee waiver, which basically waives the deductible if something happens.

Both companies have deductibles that must be met before reimbursement.

Finally, some credit card policies’ CDWs also apply to hourly car share programs.

Non-Owner Auto Insurance

If you rent cars frequently, you might consider purchasing non-owner auto insurance, which offers liability coverage for drivers who don’t own cars. It may be cheaper than purchasing insurance every time you rent. It may supplement the coverage included with car share programs, too. This insurance could also cover you if you frequently drive other peoples’ cars.

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 to make the best of your time on the open road.

– KATHY

 

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One thought on “A Non-Car Owner’s Guide to Car Rental Insurance

  1. If you have your own auto insurance policy, it may cover collision damage and personal liability for temporary use of a rental car. Check on that before you rent a car, and you may be able to decline that coverage at the rental car counter.

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