About once every three years in my car-less life, I start to fantasize about all the errands I could accomplish with four wheels and a trunk. (Home Depot! Goodwill! The grocery store! The dump!!) Despite the growth of various car-rental-alternatives (like ZipCar and Car2Go), sometimes a traditional rental is the easiest and cheapest way to get your hands on a vehicle. But whenever I start to think about renting a car, my inner lawyer rears her head and asks, “but what about insurance?”
If your travel plans (or errand plans) ever involve a rental car, then you may share my dread of the “insurance question.” The car rental companies really really want you to buy it; they will try to convince you your life depends on it. But it’s not because they’re looking out for you: they make a huge pot of money off of “optional” insurance.
I recently decided to get to the bottom of this conundrum once and for all. Once I had the answer, it seemed only fair to share it. So here you go:
There are two types of insurance that car rental companies try to up-sell you on, and spoiler alert, you can usually say no to both of them:
“Collision damage waiver” – This covers damage to your own rental car. It actually is good to have, but you probably already have it. Many, many credit cards include this kind of rental car coverage as an added benefit of card membership; you just have to use the card to pay for the rental and say “No” to what the rental company is offering. If your credit card doesn’t cover it, you can also find policies that do the same thing for a lot less than what the rental company charges; check out Insuremyrentalcar.com.
“Supplemental liability coverage” – This covers damage you do to other people’s cars, called “third party liability”. It’s like the auto insurance you’re required to have on your own car. And in fact, your auto insurance usually covers you in a rental, too; just check your policy to confirm. But what about people, like me, who don’t have auto insurance? Car rental companies are required to insure all of their vehicles, so they already have third party liability insurance on the car you rent. The “supplemental” insurance they want you to buy covers damages above and beyond what their insurance covers. In other words, it’s gotta be a doozy of an accident to trigger it. If you’re really risk averse, or a really bad driver, you might want it (or maybe, don’t drive?). But it truly is “optional”, no matter how hard the clerk behind the rental desk tries to push it.
And by the way, you can also add rental car insurance to your travel insurance policy, quite cost-effectively.
Not the most scintillating of topics, I know, but don’t you feel better now, knowing all that? Yes, I thought so. You’re welcome.