Rental Car Insurance Options

May 18, 2009 by TFB

By the time you read this, I'll be on vacation in Ireland. I will rent a car and drive around the country. Naturally I don't want to expose myself to losses resulting from a car accident while I drive a rental car in Ireland. I did some research in rental car insurance. I'm sharing this here with you.

1. Liability vs. Theft, Collision and Damages. On any auto insurance policy in the U.S., the coverage for liability and the coverage for the car are separate. If you have an older car, you may not have coverage for the car itself, but you should have coverage for liability, i.e. damage you cause to others. This liability coverage may or may not follow you worldwide. You have to call your auto insurance company to find out. If you are covered, there is usually no deductible on liability coverage. Theft is covered under comprehensive while damage caused by a collision is covered under collision. There are separate deductibles for comprehensive and collision coverage. Your collision and comprehensive coverage from your auto policy also may not follow you worldwide. I called my insurance company. They told me I will be covered for liability worldwide but I won't have collision or comprehensive coverage outside of U.S. and Canada.

2. Primary Rental Car Insurance. Your own auto insurance usually covers you when you rent a car, at least in the U.S. If you don't want to use your own auto insurance (and subject yourself to premium increases in case you file a claim), you can buy primary rental car insurance. I found two places that sell primary rental car insurance:

Company American Express [1] TravelGuard
Product Premium Car Rental Protection Car Rental Collision Insurance
Cost $18-25 per rental $9 per day + $3 service fee
Coverage Limit $75,000 – $100,000 $35,000
Deductible None $250
Max. Days 42 (30 for WA residents) 180
Covers Liability No No
Covers Theft and Damages Yes Yes
Covers Loss of Use No No
Excluded countries Australia, Ireland, Israel, Italy, Jamaica, and New Zealand Ireland, Jamaica
More Info 800-338-1670 800-826-4919

[1] Must enroll an American Express card

I don't find primary rental car insurance that useful. I am exposed to the risk of having an auto accident every day when I drive my own car. That risk is covered by my own insurance. I don't see why all of a sudden I want to pay extra to protect my own insurance only when I rent a car. If you want primary rental car insurance though, I think the American Express product is a better deal.

3. Secondary Rental Car Insurance. Many credit cards provide free rental car insurance. This insurance only covers theft, collision and damages. It does not cover liability. Usually it's also secondary, which means your own auto insurance must pay first. In effect, the credit card's rental car insurance only pays your deductible. If you don't have collision or comprehensive coverage on your own auto insurance policy, then the credit card's insurance becomes primary.

  American Express Visa Signature MasterCard
Cost Free Free Free
Coverage Limit actual cash value actual cash value $50,000
Deductible None None None
Max. Days 30 15 in U.S.; 31 outside U.S. 15
Covers Liability No No No
Covers Theft and Damages Yes Yes Yes
Covers Loss of Use No Yes Yes
Excluded countries Australia, Ireland, Israel, Italy, Jamaica, and New Zealand Ireland, Northern Ireland, Israel, Jamaica Australia, Ireland, Israel, Italy, Jamaica, and New Zealand
More Info 800-338-1670 800-397-9010 800-622-7747

The coverage from Visa and MasterCard are better than that from American Express because Visa and MasterCard also cover loss of use.

4. Ireland. If you are still with me, you notice Ireland is one of the excluded countries in all these insurance options, and I happen to be going to Ireland! I don't know what the deal is with Ireland. Theoretically AmEx, Visa, and MasterCard cover me if I rent a car in Iraq but they won't cover me in Ireland. Isn't that crazy? The rental car companies in Ireland offer Collision Damage Waiver (CDW) for about 15 Euros per day, and it comes with a deductible of 1,500 Euros or so. 1 Euro is worth about $1.50 now. If I pay another 10 Euros per day for a so-called "Super CDW," they will lower the deductible to 100 Euros. $25 Euros per day for insurance is more than the cost for renting the car itself!

Fortunately I found a way to avoid being fleeced. The rental car insurance offered by a regular ("Platinum") MasterCard excludes Ireland. The insurance from a World MasterCard (except those issued by Citibank) includes Ireland. Needless to say I upgraded my MasterCard to a World MasterCard. Whew!

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Comments

17 Comments on Rental Car Insurance Options

  1. AM on May 18, 2009 | permalink
    2.  

    A reason to pay for rental car insurance is to avoid the hassle and be able to just walk away. Otherwise it's your responsibility to make the rental company whole and deal with insurance. A rental company might insist that you leave a large deposit because they are afraid you won't pay, and then you need to worry about extracting the repair estimates/bills from them so that you can submit them to your insurance. This may be difficult when the rental was half-way around the world and you don't speak their language, etc.

    I'd be interested in reading about practical experiences with submitting claims for a rental car damages, especially if they occurred abroad. Maybe it's not that bad.

  2. JC on May 18, 2009 | permalink
    3.  

    Wow what a coincidence.

    I will be leaving for Ireland this Wednesday with a couple of friends. What cities are you going to?

    I just learned how to drive manual this weekend. Hopefully driving in the cities won't be a problem.

    Enjoy your trip!

  3. wl on May 18, 2009 | permalink
    4.  

    If one has no personal auto insurance but does have rental car insurance through a credit card, what do you recommend for liability insurance? Skip it, buy from the rental car agency, or elsewhere?

  4. right side of the river on May 19, 2009 | permalink
    5.  

    as a follow-up to wl's question: are you required to have liability coverage when you rent a car? i've rented off and on within the US and have always been able to get by just with the coverage from my credit card, but this last time I was told I couldn't rent without proof of liability coverage, which I then had to purchase from the rental car company.

  5. Sharon on May 19, 2009 | permalink
    6.  

    Before finding this article, I discovered on my own that a regular Mastercard doesn't cover collision damage in Ireland. So I applied for a Travelocity WORLD mastercard for exactly this reason. However, without any notice or explanation, I was issued a Platinum card instead. I'm very annoyed with both Travelocity AND Mastercard at this moment and waiting to hear if they will fix it. I have good credit and simply want the card I requested when I applied. If you apply for the WORLD card, make sure that's what you get before you put the rental charges on it.

  6. TIE on May 19, 2009 | permalink
    7.  

    right side of the river,

    Did you ask the rental car agent to call the credit card company to verify your coverage? That should have settled it. If that isn't good enough then I would be strongly tempted to find another rental car company.

  7. right side of the river on May 19, 2009 | permalink
    8.  

    TIE, you know, I didn't really know what to do in that situation given that this was the first time someone had told me this, and the reservation had already been paid for in advance online. Budget car rental at the Las Vegas airport, in case you wanted to know. and yeah, not doing business with them again!

  8. TFB on May 19, 2009 | permalink
    9.  

    Checking in from Ireland. The World MasterCard worked. The guy at the rental car counter asked me if I had a World MasterCard. When I pointed out the word World on my card, he just handed me a piece of paper for me to sign, which said I chose to have the credit card cover me.

    @JC – The roads in Ireland are very bad: narrow and winding. Driving on the left side of the road makes it worse (driver sitting on the right side of the car). If you only learned how to drive a stick shift, good luck. I paid extra and rented an automatic. I still find it a challenging chore.

    @wl and @right side of the river – You are legally required to have liability insurance when you drive, although nobody ever asked me for proof of coverage when I rented a car. If you don't have auto insurance because you don't have a car, you are supposed to buy liability insurance. None of the options I listed in this post provide liability coverage. They only cover the car, not the bodily injury or property damage you cause to others. I haven't done any research for liability coverage.

  9. Keith on May 26, 2009 | permalink
    10.  

    Right side of the river –
    My understanding is that each state makes every rental company carry a basic amount of liability insurance. Which makes sense because the last thing a state wants is a company giving cars out to people without some kind of liability insurance. Of course, rental companies don't advertise this very much.

    Also, if you have renters or home owners insurance I would check with them. You should have a broad liability coverage there that would cover you as well.

  10. Craig on June 5, 2009 | permalink
    11.  

    In Nevada we will charge for for lost rental time if your vehicle is in need of repair. We will charge you full rental until it is repaired, which could be up to 28 days. Your insurance DOES NOT COVER THIS CHARGE! Neither does your CC protection. Your insurgence carrier and CC card company will not disclose these facts readily. Your deductible also applies and they will not cover that. There are other exclusions also….. it's the insurance providers way of getting out of paying a claim. Also a rental LDW and CDW will not cover if you are drunk or under drugs….. in reality GET REAL, don't think you're too good and never at fault.

  11. Bob on June 11, 2009 | permalink
    12.  

    American Express does cover loss of use if the rental company will produce a "fleet utilization log" showing that someone wanted to rent the car while it was being repaired but could not. The rental company may choose not to provide this.

    Also, the best reason to buy primary car rental insurance is if you are renting a particularly expensive or "exotic" car because your regular credit card CDW may not cover it. For example the regular Amex insurance will only pay if the car you rent has an MSRP less than 50k USD.

  12. TFB on June 11, 2009 | permalink
    13.  

    @Bob – The PDF I linked in the post for American Express stated in the middle of p. 4 that the policy will not cover "loss of use fees imposed by the Rental Company." It could be outdated. Do you have a link to the policy that shows it does cover loss of use?

  13. JSM on June 12, 2009 | permalink
    14.  

    What car rental company are you renting from? Did you pick up the car at Dublin Airport or elsewhere? And what is the daily rate (minus the car rental insurance, of course :-) We're traveling to Ireland next month, and it would be great to have this info.
    Hope you're enjoying your trip!

  14. TFB on June 12, 2009 | permalink
    15.  

    @JSM – I rented from Europcar, booked through Expedia, picked up at Dublin airport. Daily rate was 13 Euros plus taxes and fees. Total cost came to about $25 a day. Remember don't make phone calls with your credit card.

  15. David on July 3, 2009 | permalink
    16.  

    I too am planning an Ireland trip…leaving mid-August. I have found getting a World MasterCard to be a frustrating runaround in its' own right. I am facing US$345 just to have CDW & SDW for 8 days. Outrageous. I wish someone could convince me there is a better way. I am not even sure that the World MasterCard would really cover me.

  16. vickie on July 7, 2009 | permalink
    17.  

    What company did you get your World Master Card through?

  17. TFB on July 7, 2009 | permalink
    18.  

    @David and @vickie – I got my World MasterCard through Chase. I already had a regular MasterCard with them before. I asked Chase to upgrade my card to a World MasterCard. They gave me a Chase Freedom card, which is also a World MasterCard. It was done in about a week.

    Europcar took my World MasterCard CDW coverage without fuss. The guy at the counter actually asked me if I had a World MasterCard.

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