Getting ready to purchase auto insurance on that rental?
Hold your horses.
I totally get that you don’t want to be held liable should the worst happen. After all, you’re renting a car for convenience or vacation—the last thing you want to do is worry about the unknown.
But you also don’t want to spend more money than you have to. If you are purchasing an auto rental on a credit card, you may already have coverage. You may also have coverage if you carry a regular auto policy.
Don’t automatically agree to paying yet another premium. First, call up your credit card and insurance companies to see what you already have.
Auto Insurance Offered Through Your Credit Card
If you are paying for your rental with a credit card, you may already have coverage. These policies most often cover damages caused by collision and theft.
Let’s look at PenFed’s Platinum Rewards Visa Signature® Card. As long as you paid for the rental entirely with this card and only had authorized drivers per your rental agreement operating the vehicle, coverage includes:
- Physical damage to the vehicle
- Theft of the vehicle
- Towing charges as long as they’re reasonable
- Valid loss-of-use charges imposed and substantiated by the auto rental company
If you’re renting domestically, coverage only applies to vehicles rented 15 days or less. If you’re out of the country, it applies to rentals of 31 days or less.
Not all vehicles are covered. For example, if you wanted to roll around in a Ferrari, you wouldn’t qualify for coverage. The same goes if you sign a rental agreement for any luxe vehicle or a van, motorcycle, moped, open-bed vehicle, or antique auto.
These exceptions are pretty standard across card companies, but it’s always a good idea to give your benefits administrator a quick ring before signing to make sure your specific make and model will be eligible for coverage.
The only thing you have to do to accept coverage is definitively decline the insurance the rental agency is offering you. In writing.
Your Own Auto Insurance
If you have auto insurance, the following areas will generally be covered by your own policy:
- Liability to others’ property in case of property damage
- Liability for others’ medical bills in case of a crash
- Medical expenses for you and others in your vehicle
This is a good time to review your coverage limits. If they’re too low, up them.
If you carry a renter’s or homeowner’s policy, your personal effects will typically be covered in case of theft—even though you’re not at home, and even though you’re in a rental car.
Your auto policy should also cover damages due to collision or theft, but if you have a deductible the policy on your credit card should help make up the difference. You’ll either have no out-of-pocket costs or be reimbursed for expenses in those two areas.
What Insurance Should You Buy from a Rental Agency?
If you do not have your own auto insurance policy, it’s wise to purchase the liability coverage from the rental agency, even if you have collision and theft covered via your credit card.
If you and everyone in your car carry health insurance, you can probably skip the medical coverage—unless someone knows they have an astronomical deductible or low coverage limits.
If you don’t carry homeowner’s or renter’s insurance, get on that. You should have it anyways. But if you don’t currently have a policy and you’re traveling with belongings you’d be remiss without, it’s not a bad idea to sign on for the personal effects coverage, too.
This post is in collaboration with PenFed Credit Union. The views expressed in the article are the views of the author and do not necessarily reflect the views of Pentagon Federal Credit Union. PenFed Credit Union is an Equal Housing Lender and is federally insured by the NCUA.