There are so many different ways to insure yourself when driving a rental car. You could buy collision damage waiver (CDW) insurance from the company you are renting from, you could buy collision insurance from a third party, or you can simply rely on your own personal auto-insurance or even the coverage offered to you by your credit card. Knowing which option is best for you, however, can mean all the difference between paying nothing to paying a premium for any damage occurred to the vehicle while you are driving it. If you’re wondering why purchase rental car insurance, consider the following:
What to Know About Credit Card Coverage
Many of the top credit card companies offer some sort of coverage, but this coverage is not universal and not always the best choice for many travelers. To start, there are exceptions that you might not know about. One credit card company might cover the use of popular SUVs like the Range Rover, while another one won’t. Similarly, if you are renting a vehicle for a long-term road trip, you might not be covered after so many consecutive days, which, if you don’t know, could end up costing you the full amount at the end of the trip if something were to happen.
You Have to Pay the Full Amount on Your Credit Card
Another dilemma with relying on your credit card’s auto coverage is that you must pay the full amount of the rental onto your card. For those with limited credit or poor credit, this could already put you out of the game. If you do not put the full amount on your credit card you will not be covered, at which time you must consider another option for car rental insurance.
Most Credit Card Companies Offer Secondary Coverage
This means that you must first go through other avenues for compensation if you needed to pay for damages. For instance, you must first use your personal auto insurance, which could result in high deductibles or increased rates afterwards. Only after you are compensated through your personal auto insurance can you then attempt to claim the rest through your credit card company.
Some credit card companies do offer full coverage, but you have to check with your specific account and know what you are protected under first.
You Will Likely Have to Pay “Loss of Service”
Loss of service refers to the period of time that the vehicle is in the shop being fixed. Typically, you will have to pay this loss of service yourself, as it is not covered by your insurance or credit card company. Loss of service will vary, but it is generally the daily rate for the vehicle while it is out of commission. Other hidden costs might be administrative, loss in value for the vehicle, and so on. Opting for a quality and customer-friendly rental agency can help you avoid some of these costs, but it is always important to know that they are a possibility and you will likely have to pay for them out of pocket.
You Have to Pay Up Front
Another downside to using your coverage through your credit card, or even relying on your personal auto insurance (which, in a few cases, could be used to cover damage to your rental vehicle as well) is that regardless you will have to pay the damages upfront to the car rental agency. Afterwards, you will be able to file a claim with whichever insurance policy you use. If there are any complications, this could even hurt your credit score or put you in a financially precarious situation as a credit bill comes due.
Business Travelers and International Travelers
For those who are traveling on their company’s behest, it is critical to know that your personal auto insurance will probably not cover your rental. Similarly, if you are traveling internationally, your personal auto insurance will likely not cover your rental. To be absolutely safe and to provide your employers with a set invoice or to adhere to a budget, it is typically best to choose the CDW offered by the rental agency.
What Collision Damage Waiver Means
The insurance option you can opt for through the rental agency is an agreement that any damage (with some minor exceptions, like tires) will be waived. This means you will not have to pay for damages, loss of use, or any other fees available.
Purchasing rental car insurance is the best way to insure that you are covered, and that you will not have to pay any upfront costs (even if you could reclaim them later). For your safety and financial security, always be insured, and always know what you are covered for.