Is Rental Car Insurance a Scam?
If you’ve ever been to the rental car counter in an American airport, you know that one of the ways the rental car company tries to make money is by selling you their in-house car insurance. In some cases this can add $30 US per day to the cost of your car. That’s a significant price increase! The reality is, most people already have insurance coverage that will extend to their rental car, either from their own car insurance, or from their credit card.
If you have American auto insurance
If you live in the United States, your car insurance will probably cover your rental car, especially if your existing vehicle is either leased or financed and has full coverage (liability, un/underinsured motorist coverage, collision, and comprehensive). If your personal vehicle is an older one, and you’ve dropped the comprehensive coverage, check with your insurance company anyway, because your policy may already include a line item for rental car coverage, just as policies may include emergency roadside assistance, or rental car reimbursement in the event of an accident.
If you have foreign auto insurance
If you don’t live in the US, check your policy before heading to the States for work or pleasure, because your policy may still cover you in a rental car, even overseas. You may have to call the customer service representative for your insurance carrier, or look online to find this information.
If you pay for your rental car with a credit card
Even if you don’t have your own auto insurance, if you’re paying for your rental car with a credit card (a true credit card, and not a debit card) there may be rental car coverage included in your card agreement, especially if you’re using a corporate credit card, or your card is from American Express. Check with the credit card issuer before you agree to rental car insurance, to save yourself time and money.
If your trip is long-term
If none of the above situations apply, and you really don’t have your own coverage, go ahead and use the rental car company’s insurance, but be very clear on what the costs are, and only buy the coverage you actually need. If your trip will last longer than two weeks, it may be worth finding car insurance online, as short-term, or temporary, coverage may be less expensive than the car company’s coverage for an extended period of time. This type of coverage is meant for people who need to insure a car for a couple of weeks or a couple of months, but not as long as full coverage term, which is typically six months.
The bottom line is this: Rental car insurance isn’t a true scam – you do get what you pay for – but it’s horribly expensive, and usually redundant. Do your homework before you agree to buy it.