You've probably heard for years that it's a waste of money to buy rental car insurance. It's just another way to get gouged, and you already have car insurance, right?
In fact, it's not that clear-cut. There are a number of reasons you should consider it. For example, one little-known clause in your contract with the rental car company could cause you trouble if your existing auto insurance doesn't cover it.
[InvestingAnswers Feature: You Can't Afford to Believe These Car Insurance Myths]
It’s called "loss of use." This means that when there is an accident, and the rental car is out offor, say, a week, your contract with the rental company calls for you to reimburse it for the loss of that auto's use during that time. You'll be charged for the amount of money the car rental location lost while the car was in the repair shop.
The small-print risks that aren’t always clearly defined can make you liable for things you never considered.
"More and more these days, consumers need to check out the fine print of their insurance policies and make sure they're getting what they think they're getting," said Carmen Balber, Washington D.C. director of Consumer Watchdogs, a nonprofit consumer advocacy organization.
Granted, most of the time when you're deciding these things, you're at the car rental counter and you just want to sign on the dotted line and drive to your destination. But while planning your trip, it may be worth a few extra phone calls to your regular car insurance provider and yourto make sure you're covered.
Tip: Credit cards additional coverage for car rentals. MasterCard and Visa, for example, both have limited coverage for car rental damage. They don't cover personal liability, but they do cover "reasonable" loss of use and a list of other things, according to the card companies' websites.
If you stack up all the things that might not be covered by your own car insurance, rental car insurance is worth pursuing. Here's why:
1. Your insurance may not cover all the medical bills if you get into an accident. Sometimes state-mandated insurance doesn't cover more than $50,000. Credit cards can help, but one broken bone can sometimes run more than $100,000. Personal Accident Insurance on the rental car covers the renter and passengers for medical bills resulting from a car crash.
2. Your coverage isn't the same in different states. It can vary by state, said Johanna Keep, vice president and director of personal lines at CBS Coverage Group in Plainview, NY. Unless you want to check out all the states where you're traveling, it's safer to choose the renter's umbrella coverage.
3. Your insurance probably won't cover you if you're leaving the country. If you go out of the U.S. and Canada, you're probably not covered by your U.S. insurance. And even if you are, you need to check to see -- that country may not accept your U.S. insurance, Keep said. That means even if your insurance company wants to pay out, the country may reject it. Then, you definitely will need supplemental rental car insurance.
Tricky things can happen in foreign countries, said Mark McAndrew,of Charitycountry.com. After he took a rental car to England's Glastonbury festival, he said he brought it back unscathed, but with the festival sticker on the windscreen -- which was apparently not easy to scrape off.
"They tried to keep the 500-pound deposit, supposedly for damage, because the guy was annoyed at cleaning that sticker," McAndrew said. He got his deposit back only after recording a phone with the rental rep, then playing it back to the rental car's head office. The demonstrated he had not been swearing and threatening as the rental rep had claimed and included the rep's admission that the "damage" was just the sticker.
"After that, I video/photo every hire car before I leave and when I return it," he said.
4. Your own insurance may not cover the rental car for the time you rent it. Beware if you're renting a car for long periods of time. Many insurance companies drop their coverage after the first 30 days, Keep said.
"But some policies may have a shorter period," said Robin Smith Westcott of the Florida Office of the Insurance Consumer Advocate. Some veteran travelers skirt this rule by returning the car for a day, then renting it again.
5. Your insurance may not cover different types of vehicles. If you'll be renting a truck or van, you'd better make sure your insurance plan that you have for your sedan or sports car stretches to the new kind of vehicle. There's a chance it won't. The same rule applies to moving trucks. If it doesn't, you either need to extend your insurance, or buy the rental company's insurance.
6. If you get into an accident, you might have a hefty deductible. You might be on the hook for an initial deductible payment and administration fees before your insurance company starts paying out. The deductible ranges according to your plan. You need to know how much it is.
"The driver's personal auto policy will not cover these amounts but the additional rental car coverage, if purchased, will," Smith Westcott said.
The Investing Answer: Jay Davis was driving a rental car while on his vacation in Los Angeles when another car sailed through a four-way stop sign, crashed into him, damaged his rental and sped away. Davis hadn't bought the optional rental car insurance. Weeks after he returned the car, the rental car company pushed him to sign forms that would have made him personally responsible for the costs of the damages and the loss of use of the car.
"They attempted to charge fees, but I refused to pay," Davis said. Instead, he referred them to his auto insurance company.
"Never attempt to negotiate with the rental company -- that's why you have an insurance agent and an insurance company to support you," he said.
In the end, Davis didn't pay a cent.
"Due to the fact that my accident was a hit and run I did not even have to pay the deductible," said Davis.