Car Rental Insurance | How to Determine Whether You Need the Extra Insurance

Car Rental Insurance | How to Determine Whether You Need the Extra Insurance


Hi there, it’s Ernest from Trip Astute. In
this video, we’re discussing the car insurance dilemma, and whether you should
opt for extra insurance the next time you rent a car. (light chiming music) Renting a car can be a
frustrating process. When you search for prices, they seem very reasonable. But
then you add in all the extras, and you’ve often doubled the price of the
rental. One of the biggest options that you’re presented with is rental
insurance. It’s hard understanding whether you need it or not, and the
rental car companies will often try to convince you that it’s critical to have.
Also, many of you have travel credit cards which often offer a rental car
insurance benefit. So today, we’re going to explore the topic and hopefully give
you some things to consider when making a decision on insurance. First off, we
need to clarify that not all credit card auto insurance benefits are the same. In
order to understand the nuances, we need to discuss the difference between
primary and secondary auto insurance. Primary means that it’s the first line
of defense when your coverage kicks in. Secondary is to cover anything beyond
the primary insurance, which would normally be your normal or regular auto
insurance policy. Keep in mind that this only covers the damages to your rental
car, so if you were to cause an accident and damage another vehicle, then the
credit card company would only cover the damage to the rental car and not to the
other vehicle. You would have to pay for the other damage using your personal
auto insurance or out of pocket. Since there are so many variations of this
scenario, I thought I’d run through a couple just to help illustrate the
benefits and risks. In scenario one, you have personal auto insurance and you
have a credit card with primary coverage. If you were to hit another vehicle while
driving your rental car, then your credit card would cover the damage on the
rental car, and your personal auto insurance would cover the damage to the
other vehicle, as well as any damage on the rental car that is in excess of the
coverage provided by the credit card. In this situation, you probably don’t need
any additional insurance coverage and can decline the coverage being sold
through the rental car company. In scenario two, you have personal auto
insurance and you also have a credit card with
secondary coverage. In this situation your personal auto insurance would pay
for the damage on your rental car and the vehicle you hit. And anything in excess
on the rental car would be paid by your credit card’s coverage. In this scenario, I
probably wouldn’t buy the extra coverage, but it might be worth it if you’re
worried about your insurance premiums going up due to an accident, or if you
feel like your personal auto insurance is insufficient. In scenario three, you don’t
have personal auto insurance, but you do have a credit card with primary coverage.
If you were to cause an accident, then the damage to your rental car would be
covered by your credit card, but you would still be liable for the damage to
the other car. In this scenario, I would opt for some kind of additional coverage.
In scenario four, you don’t have personal auto insurance, but you have a credit
card with secondary coverage. In this situation, your secondary becomes primary
since there isn’t another source of coverage.
Unlike the previous scenario, the damage to your rental car would be covered, but
you would still be liable for the damage to the other vehicle, so I personally
would opt for rental insurance coverage. In addition to these scenarios, here are
some extra tips to consider. Number one: Consider third-party liability insurance.
Rather than buying insurance from the rental car company, you can now purchase
liability-only insurance for often cheaper, especially if renting for a
longer period of time. This works great for folks that have rental car insurance
benefits on their credit card, but want to add the liability insurance just to
be safe. Since a lot of people now rely on ride-sharing and public transport, or
choose not to own a car, this could be a great option to protect yourself when
renting a car. Number two: Use your credit card to book the reservation. If you want
to take advantage of your card’s insurance coverage, make sure you book
the reservation with that card. Otherwise, the credit card company will likely
decline your claim. Number three: Call your credit card company if you’re
unsure of your coverage. There are so many nuances and scenarios, so make sure
you get all your answers before your trip. If you’re unsure of your coverage
or benefits, I suggest calling your credit card
company. Also, if you’re not sure whether you have primary
or secondary insurance, I’ll include a link below that shows which cards have
primary auto insurance coverage. Number four: Consider that your coverage
may be different when traveling internationally. If you have personal
auto insurance, you may want to double- check whether your insurance has limits
or conditions when renting a car abroad. If so, you may want to get temporary
third-party auto insurance that guarantees international coverage. Number
five: Insure that your personal auto insurance covers rental cars. Most
policies cover whatever car you’re driving, including rental cars. But if
you’re unsure, contact your insurance company to verify the coverage. Number
six: Bring a copy of your insurance card or documentation when traveling. In the
event that you do get into an accident, you’ll be glad that you have your
documents with you. Also, I’ve had some experiences where the rental car rep
wanted to see the details of my coverage or policy, so it’s helpful to have it
with you when picking up your rental car. Again, I just want to emphasize that
everyone’s situation is different and your appetite for risk may be different
than mine. When traveling, I tend to be a bit more conservative, as I prefer to
have peace of mind, but your situation might be completely different. Lastly, if
you happen to have an ultra premium credit card like the American Express
Centurion, then you likely have liability coverage as well. I definitely don’t have
one and I probably would never qualify for one either, but I thought I’d let you
know in case you happen to have one of these exclusive cards. And that’s our
travel tip on rental car insurance. Do you have any experience with rental cars
or the coverage provided by credit cards? If so, please share them in the comment
section below. If you enjoyed this video or found it useful, please hit the “like”
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