Editorial Policy

I turned down car rental insurance at the counter. Bad idea?

Kristin McGrath

September 6, 2013

I don’t rent cars often, but when I have, I’ve always responded “sign me up!” when the agent got to the part about insurance. But when I picked up my rental early this morning, I said, “Thanks, but I’ll pass.” The reason? My new credit card’s rental insurance protections.

The story
My boyfriend and I are making a 500-mile round trip this weekend for a special event. When I think of taking my aging car, I immediately imagine us stranded on the roadside in our fancy clothes in 100 degree heat. My boyfriend’s car broke down a few days ago, so it’s not going anywhere. Therefore, we’re renting a car.

The cost
If you’ve rented a car, you know how it works: The rate quote you get online looks downright cheap — until you get to the counter. Suddenly, the agent is using scare tactics to get you to buy the rental company’s insurance. In our case, insurance ($20 per day) would have doubled the cost of renting the car.

My card’s coverage
I just got a credit card that has rental car protection. So I immediately took a look at my contract to see what it covered — and didn’t. The card I have offers what’s called secondary coverage. That means it kicks in after my regular car insurance pays out — and would pick up the $1,000 deductible I have for my collision and comprehensive coverage.

To be covered by my card, I had to waive the insurance offered by my rental car company and pay the entire cost of the rental with my card. I also can’t use my car to commit a crime, or take part in a riot or a street race — but I don’t think it’s going to be that kind of weekend anyway.

I called both my auto insurance company and my credit card provider to make sure I didn’t miss anything in the small print. To know what to ask, I used the list of coverage considerations in this blog on U.S. News & World Report from Gary Foreman, founder of TheDollarStretcher.com.

The catch(es)
After talking with my insurance company and credit card provider, I discovered a few costs that neither will cover. Rental car companies tack on a slew of fees if you damage a car, as this post on the BudgetTravel blog points out, including:

  • Loss-of-use fees: If the car you rent has to be repaired, the rental company will charge you to make up for the money it could have made by renting out the car while it’s in the shop.
  • Towing: If the car needs to be towed, we’ll be footing the bill.
  • “Administrative” fees: The rental company has carte blanche to tack on whatever it wants to when it comes to the car’s diminished value after the accident or the cost of processing your claims after an accident.

There’s one more detail hiding in the fine print: Additional drivers are only covered under my auto insurance protection and my card’s protections if I add them as approved drivers. I booked the car with my card, but my boyfriend will be sharing the drive — so we ate the $10-per-day fee to add him to the rental contract.

Keep in mind, there are a bunch of vehicle types excluded under most credit card rental insurance coverage — including trucks. We’re renting a compact car, so we’re definitely covered. But Michael Pruser, who wrote about his rental truck nightmare on the Dough Roller, wasn’t so lucky.

If you need help combing through your card’s coverage documents for gotchas, travel blog BoardingArea has a step-by-step guide — and some humorous, plain-English translations of contract jargon.

My decision
Although I won’t be covered for the fees listed above, I decided to waive the rental company’s coverage. The price they quoted for four days of insurance was twice what I already pay for my monthly car insurance premiums. The amount I’ve stashed away in my emergency fund was certainly another factor in my decision to risk the loss-of-use and other fees if I get into an accident.

Insurance matters are always a bit of a gamble. Making sure you’re covered for everything (including things that probably won’t happen) entails paying a lot of money. Yet if that thing that probably won’t happen does happen, and you’re not covered, you could pay much more.

Road warriors, what do you think? Did I make a mistake? Also, please share your car rental horror stories in the comments.