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When to Say Yes to Car Rental Insurance

mini cooper coupe car clipartMany travelers, including me, rarely purchase the insurance offered by the car rental company. The daily charge of $20-$40 is expensive, and the coverage often unnecessarily duplicates that provided by your credit cards and personal auto policy

Before you assume you don’t need the rental insurance, though, it’s wise to take a closer look at where you’ll be traveling and whether your existing coverage will take care of all potential costs. There are times that taking the insurance can alleviate some nasty surprises.

The insurance can be a good idea if you rent a car outside of the US. As I’ve discovered first-hand, being in a country where roads double as paths for livestock, or one where people drive on the “wrong” side of the road, can increase your risk of minor accidents. While in some countries my US policy will cover damage, I don’t enjoy the prospect of spending countless frustrating hours as an intermediary between the foreign rental company and my US insurance carrier. I am happy to pay for the insurance and avoid heated arguments with the rental company over whether any damage was pre-existing, much less the hassle of negotiating repair bills.

It is important, though, to buy insurance carefully. On a recent trip to South Africa I rented a car and purchased the insurance online. When I returned the car, the agent said I had scratched the paint. Not wanting to waste time arguing, I pointed out I had purchased their insurance, thinking that was the end of the discussion. It wasn’t. The insurance offered on the site where I rented the car was a third party policy, not one offered by the car rental company. That meant the car rental company would charge me for the alleged damage. Then it was up to me to slug it out with the third party insurer. This left me taking pictures of the alleged damage, filling out damage reports, and arguing with the rental company agent. By the time I checked in for my flight home, I was tense and stressed: exactly what I intended to avoid by purchasing the insurance.

Another instance where taking the rental company’s insurance can be beneficial is to avoid loss-of-use charges if you damage a rental vehicle. This is a fee the rental company charges to cover the income it loses while a vehicle is in the repair shop. Companies used to absorb this cost, but in recent years they have begun to charge consumers for it. The catch is that the coverage you have through your regular auto insurance or your credit card may not pay loss-of-use charges.

A few states (Alaska, Connecticut, Louisiana, Minnesota, New York, North Dakota, Rhode Island and Texas) mandate that insurers automatically pay loss-of-use claims. If you don’t live in one of these states, it’s a good idea to verify whether your credit card will cover these fees.

According to AutoSlash.com, a website focused on helping consumers save money on car rentals, Visa does cover loss-of-use charges. However, it uses “fleet utilization logs” from the car rental company to verify the claim. Obtaining those records can take time and be a hassle. MasterCard may cover some loss-of-use charges, but check the restrictions. American Express offers a separate car rental protection policy; the premium is likely to be cheaper than the premium charged by a car rental company.

Never buying car rental insurance when you travel isn’t necessarily a wiser choice than always buying it. As the consumer, it’s up to you to do enough research to decide whether the insurance is a product you need.

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