Rental car agencies push insurance products aggressively whenever you pick up your temporary vehicle. If you have the right credit card and auto insurance, optional rental car insurance is completely unnecessary.
Rental car agencies make a killing by offering Collision Damage Waivers for $20 for each day of your car rental. Agents will try really hard to convince you to buy a Collision Damage Waiver and an array of other options that can cost as much as the rental itself, but all of these are unnecessary if you do some legwork before your trip. The terms of free rental car insurance varies greatly, so be sure to check with your credit card issuer to see exactly what’s covered.
It’s important to note that there’s a difference between insurance for the vehicle you’re renting and liability that may cover injuries and damage to others’ vehicles and property. That means you’re usually covered if you scrape the car’s door, but not if you run into a pedestrian. Your auto insurance policy may already cover injury and liability insurance when you rent vehicles, but it’s important to check before you decline rental car liability insurance.
If you opted for cut-rate auto insurance to save money, chances are you won’t be fully if you get into a serious auto accident with your rental car. However, many good auto insurance plans will simply transfer whatever coverage you have on your own vehicles to your rental cars, so long as the rental period doesn’t exceed a set number of days, typically 30. Combine your auto insurance coverage with your credit card’s automatic rental car insurance and there’s a good chance are that you’ll have zero out-of-pocket liability.
American Express, Visa and Discover offer some level of rental car insurance on all of their cards. Some MasterCard cards offer rental car insurance, while others do not. The devil’s in the details however as specific cards and issuers have different rules and coverage limits.
American Express offers one of the best rental insurance programs for its cardholders. So long as you decline a rental agency’s Collision Damage Waiver and pay for the entire rental on your American Express card, the rental car will be covered automatically. It’s important to note that American Express will only cover what your primary auto insurance will not, which is typically your deductible. If you don’t have auto insurance, American Express will cover up to $50,000 for most cars and $75,000 for some premium cards. American Express does not cover large sports utility vehicles, exotic vehicles or off-road vehicles.
Rental car agents will never tell you that Collision Damage Waivers are a waste of money, but they will try to sidestep the issue if you push back. They’ll often use scare tactics and tell horror stories about how someone recently had to pay for an entire vehicle out of pocket. Yes, accidents happen and people are left on the hook, but if you use a decent credit card and do your homework before you leave on your next trip you have nothing to worry about.