Monday, 27 July 2015

Should I Take Out the Additional Insurance When Renting a Vehicle?

Renting a car becomes essential at certain points of your life. In order to add mobility and flexibility, it is essential that you find the right deal where the car rental is affordable, the mileage restrictions are flexible and most importantly you are not forced to buy an additional insurance.

There are some important things that must be considered while renting a car. The first thing is choosing the right vehicle. You might be tempted to ride a convertible, but that might not be suitable for you and your trip might become very expensive. A compact car can be appropriate and help you save money. Once you’ve made up your mind on which vehicle you would like to hire, you have to go around and look for car rental agencies that offer affordable rates.

Look for deals and discounts which will further lower the car rental costs. But beware of rock bottom prices, they might be traps. Very low prices indicate there are a lot of hidden costs associated with the car rental fees. When you’re satisfied with the rates, make sure you read the terms and conditions very carefully. Car rental agencies have several policies that can make your trip complicated. Check the early return policies, fuel policies (whether you have to return the vehicle with a full tank or pay upfront for the fuel), etc. 

One thing that makes car rental really complicated is car rental insurance. Many car rentalagencies would often persuade people to buy additional insurance so that the renters are safe from all kinds of mishaps, but is it really needed? What if you already have car insurance? Do you still need to buy insurance?
People get confused with such questions and end up doing what the agencies suggest. It is important to educate yourself about the various kinds of car rental insurances, the coverage that they provide and most importantly when should you buy additional insurance while renting a car.

About Car Rental Insurance
The first thing that you would be asked when you land up at a car rental agency is, whether you want to buy a car rental insurance. You’ll be offered with many types of insurances, which might ultimately end up confusing you. Many travellers or car renters have no idea about car rental insurance and whether they actually need it or not. This allows the agencies to persuade their clients and make profits.

Car rental has become complicated than ever, it is essential to be prepared to get the right deal. Before you get confused and feel timid to answer the staff, here are a few questions you need to ask yourself. Do you own a car? Have you used a credit card for renting a car? If the answer to these questions is yes, chances are you are already having car insurance and you already have the necessary coverage. Before you leave your home for renting a car, it is important that you read the car insurance carefully and look what coverage is available for rented car.

It is better if you can carry a photocopy of the insurance. When the person at the rental agency charges you about not have necessary, you can show him the proof. In many cases, your credit card company would also provide coverage but it is essential that you read the documents to be sure. It is true that car insurance is essential whether you are driving your own car or driving a rented car, but there’s no point to add money to your car rental bill when you already have one in place.

Even if you find that you do not have enough coverage, there is no point getting persuaded by what the rental agency staffs tell you. There are many types of car rental insurances and you must know which one to buy. Buying all the policies may add thousands of dollars to your bill, so beware! Before you head towards the car rental agency, educate yourself about the available options and evaluate which one would be perfect for you. At times buying the basic CDW (collision damage waiver) would be enough, so why buy the others?

Things to Know before You Rent a Car
There are many advantages of renting a car than waiting for public transportation or driving your own car. By renting a car you can save money and time. You don’t have to wait in the long queues to ride a public transport vehicle or worry about damages and maintenance as in case of your own car. While on a vacation, you can save thousands of dollars that you had to spend on taxis by renting a car. Hiring a car enables you to stick to your own schedule – so you know when to stop and when to drive.

Hiring a car also allows you to ride your favourite car at low costs. You can take advantage of the numerous deals and discounts that are available on various travel sites and on personal rental websites. These discounts and coupon codes can bring down the rental fees considerably, so that you ride in the most cost-effective way. Although there are numerous benefits, the hidden costs can take a toll on your budget if you are not aware of them. So it is very important to be prepared before you sign the contract and drive out the car from the agency.

Here is a list of few things that needs to be considered to make your travelling smooth and satisfactory:
·         Use Your Credit Card to Rent a Car: Using a credit card for hiring a car is a good option, since most of the car rental agencies will do a credit score check before offering you a deal. Using the credit card will save you from undergoing a credit check. Many car rental companies won’t accept prepaid credit cards. One more benefit of using a credit card is that they might provide insurance coverage. The first thing that you’ll be asked while renting a car is that whether you have insurance or not. Buying insurance from the car rental agency may add hundreds of dollars to your bill per day. Using the credit card may save you from spending extra. Several credit card agencies provide coverage for the card holder at no additional cost.

·         Extra Charges for Young Drivers: If you or any of your family member who is willing to drive the car below 25 years of age, expect some extra fee to be added to your daily rental bill. Even if you have a spotless driving history, you will be considered a liability for the car rental company. While most of the companies will not allow drivers below the age of 21years, many will allow drivers who are 25 years old in exchange of a hefty amount. So make sure you consider the age of the people who are willing to drive the rental car, when determining the budget.

·         Pay Extra for Additional Drivers: Even if you and the people expected to drive the car are above 25 years old, you’ll have to pay an extra fee to register each additional driver when you rent car. You’ll be asked to declare the number of additional drivers you need and the fee would be calculated depending on the number you suggest. So make sure you carefully determine the number of drivers you need. It is recommended to restrict the number of additional drivers to 2, so that your rental bill does not go skyrocketing.


·         Avoid Unpaved Roads: This might sound unimportant, but what if your collision damage waiver gets void? Yes, most rental companies will penalize you if you drive on unpaved roads. Ensure you read the contract well before signing. Even if you love adventures while driving, the cost of paying for the adventure is too much. Rental car insurance is very expensive so you will not want it to be cancelled. Driving on unpaved roads is prohibited due to possible damage of the vehicle and the cost to repair it. You may be required to bear the costs of repairing the car if any damage is done, due to violation of the car rental agreement.

·         Return the Car with Full Tank: the rental agency wants you to return the car the way you drove it off and this is true for the fuel tank as well. Most of the rental agencies want you to return the car with a full tank and if you forget, you’ll be charged double the actual gas rates. One option is to pay upfront for a full tank when you rent a car, but returning the car with an empty tank is ideally impossible.

·         Rent a Car Off-Site: Renting at the airport might be expensive. It is natural that after a tiring journey via flight, you’ll want to board your car as soon as possible, but if you want to avoid the airport surcharges, you have to rent a car off-site. There is no way to avoid such fees if you rent from the airport, since the rental agencies are legally obligated to collect these fees. You can travel to the downtown area by a shuttle or public transport and hire a car from there. This will help you save hundreds of dollars.

·        Extra Cost for Extras: It’s absolutely perfect to rent the extras along with the car, if you have enough money. Travelling with a baby? Hire a baby seat. Love music? Get a radio. Want to track your journey? Hire a GPS tracker. Now that you have all that you need to make your journey comfortable and exciting, you’ll get equally excited to see the rental bill. Don’t faint if you see a thousand dollar added to your bill for extras. Yes they are that expensive. There are ways to avoid these hefty fees. Bring along your baby seat, you’ll probably require it on the flight as well. Use the navigation system on your mobile phone, that’s equally good. Equip yourself with whatever you will need while travelling and avoid extra fees being added to your rental bill.

·        Buy Car Insurance Wisely: It is quite possible that you don’t have enough coverage, so you have to buy insurance to save yourself from legal liabilities. If you are in such a situation, you can opt to buy insurance from the car rental agency, but that can be very expensive. One other option is to buy car insurance from other sources. This way you can negotiate the price and shop around to get the best deal. There are many rental car insurance options, but buy ones that are essential.

It is easy to pile on money on your car rental bill, but doing some research and homework can save you from paying extra money to the car rental agency. Make sure you ask questions to the rental staff and have a good idea about what to expect from the car rental. If you are unable to understand any part of the rental contract, ask for an explanation. Sign the contract only when you are satisfied with clause and policies mentioned in it. Being able to drive your favourite car is great, when you can drive it in a cost-effective manner.  

Should You Purchase a Car Rental Insurance?
The answer to the question ‘Whether you need car rental insurance?’ is never easy. When you reach the car rental counter, the first thing you are offered is a car rental insurance, and you are expected to make a prompt decision, whether you need it or you don’t. Many people decline the offer without giving it a second thought since they either don’t want to add extra to their daily bill or they are confident that they have enough coverage already.

What if you meet an accident? What if the rental car is damaged? Does your car insurance cover you from all this? This brings up the question all over again, ‘should you buy car rental insurance’. Well, it depends on some factors like your auto insurance, credit card benefits and what sort of coverage the auto rental policy offers. Here are some considerations that will help you decide whether or not to go ahead with buying car rental insurance:

1. Go through Your Auto Insurance
Reviewing your own auto insurance is very important to be able to decide, whether you need additional car rental insurance or not. If you own a car, you must be having auto insurance and in most cases this would cover your rental car as well. The basic liability coverage would protect you from damage that the rental car causes to other vehicles, people or properties. If you don’t have a car of your own, you should consider buying car rental insurance from an insurance company that offers the best prices.

If you have auto insurance and you don’t want to buy extra insurance, make sure the existing policy has collision coverage and comprehensive coverage that covers any damage to your car due to accident, flip over, vandalism, flood, fire, etc. If you find these present on your auto insurance, move on to the fine prints to find out whether rental cars are eligible to get the coverage. The best way to get answers to these questions is, call the insurance company and get answers to all the questions.

2. Know Your Credit Card Benefits
The car rental protection offered by various credit card companies vary by the type of card you are using. While many companies would pay the loss-of-use charges, many will explicitly prohibit them. Since the levels of protection differ widely, it is wise to call your credit card company and ask about the specific coverage details provided for each card that you have.

The primary coverage would be provided by your personal auto insurance while the other things would be taken care of by the credit card companies (but they have their own limitations). Certain type of cars might not be covered by the credit card companies, so make sure you have a detailed discussion about the coverage provided. The credit card coverage will be applicable only if you do not take insurance from the car rental agency, make the payments using that particular credit card and the person renting the car is same as the one who owns the credit card.

There are many things to be considered if you are depending on the credit card company to provide coverage for rental cars. Meet them personally to know about the details, and once everything is settled ask them to provide s printed copy of all the coverage and terms & conditions.

3. Go through the Car Rental Agreement Thoroughly
For this, you will have to visit the car rental agency. Ask for the car rental agreement and find the section that includes details about your responsibilities under the state law in case there is an accident and the rental company’s waiver.  If the liability exposure is limited by the state law and you are lucky to have enough protection from your personal auto insurance and credit card companies, you can confidently decline the car rental insurance offered to you.

Whether you need additional insurance or not would typically depend on your situation. If you already have enough coverage there is no point buying extra coverage to increase your daily rental bills. On the other hand, if you find that you do not have sufficient coverage, you may have to buy extra insurance. The staffs would offer you many types of rental insurance, but you do not have to buy them all. Evaluate your travelling needs and the associated perils and then buy appropriate insurance.

Accidental death and personal property insurance offered by the rental agencies should be declined at once, since these are covered under the health, homeowners and life insurance that you already have. Buying a rental car insurance can be very tricky, so make sure you do enough research and homework, so that you don’t end up paying excess.

Types of Rental Car Insurance
If you come to know that you are not adequately covered by your existing auto insurance and the credit card company, buying a car rental might become essential. Some states make it mandatory to have car insurance before you drive a car. Coverage is essential since the costs associated with damage of the car or other property can be too expensive. The medical costs of the victims can also be huge.  Moreover, to keep the rental vehicles safe, the car rental company might require you to buy insurance before you can drive their cars.

Here are the four basic types of car rental insurance which will be offered to you when you approach a car rental agency.

·         Collision Damage Waiver: The collision damage waiver and loss damage waiver is not insurance in true sense. It means you are agreeing to pay for any damage done to their rental vehicles or in case of theft. So do you need to have this insurance? This is one that you can consider buying from the rental agency. If you are forced to buy insurance while renting a car, ask for a CDW or collision damage waiver. While your personal auto insurance will provide collision coverage for rental vehicles, all types of rental charges might not be included. For example, many auto car insurance or credit cards do not pay the loss of use charges. Credit card coverage is secondary in nature, so consider buying a CDW if there is no other option. The best option to get protection against theft or collision is through a third-party rental car insurance. These are cheaper than the ones offered by car rental agencies.

·         Supplemental Liability Insurance: Liability insurance offers coverage for damage done to other’s properties and medical costs of the victims who got injured because of you. A minimum amount of liability insurance is required by all states, so if you already have auto insurance chances are you have liability coverage. The staffs at the rental agency may try to persuade you by telling that you do not have enough liability coverage, so it is essential to have supplemental coverage. If you are satisfied by what they tell you, get umbrella liability insurance which is a low cost policy added to the existing homeowners or auto liability insurance. This provides enhanced protection when you’re driving a rental car, without adding too much to your daily rentals.  

·         Personal Accident Insurance: While liability insurance looks after other’s benefits, personal accident insurance will provide coverage for your damages, injury, etc. The passengers travelling along with you will also be covered under this policy. In most cases, you are not required to buy this type of insurance since the benefits offered by the personal accident insurance is already covered by the health, car or life insurance that you already have. They are also covered under the mandatory coverage provided by the car rental agency. So you can safely decline to buy this insurance.

 ·         Personal Effects Coverage: This provides coverage for theft of personal possessions from the rental car. But the coverage has a fixed upper limit. The homeowners or renter policy already provides coverage, so make sure you check the policy before leaving home. If you are travelling with expensive jewelleries, costly electronics and other instruments, it is wise to protect them.  If you are not able to check the policies, keep a copy of the policy with you, so that you can refer it whenever needed.

The easiest way to buy a rental car insurance is to research on the types of policies available and their respective coverage. Review the personal auto insurance and credit card benefits thoroughly. If you still find yourself in a confused state, get in touch with a third party insurance company and ask about the possible alternative. Tell them about your existing policies and get their opinions about buying extra insurance from car rental agencies. Even if you check ‘yes’ on the car rental contract, there are ways to waive off the insurance. Return it to their office right on the next day and ask them to cancel the insurance.

To make your vacation or trip, memorable, it is important that you make the right choices. If you are sure you don’t need additional insurance, firmly say a ‘NO’.

Things to Consider About Your Auto Insurance before Renting a Car
In most cases, your auto insurance will provide enough coverage for you when you drive a rental car, but there are situations when you might not get the coverage at all. If you are in doubt about any situation, which can void the coverage provided by the auto insurance, get in touch with the insurance provider at once and get all the queries cleared. Some things to consider are:

·         In case, a person who is not included in your personal auto policy drives the rental car and a mishap occurs, the person and the damages caused by them may not be covered. Get an answer about this from the auto insurance provider.

·         In many cases, the coverage provided by the personal auto policy is not enough. Even if it covers collision damage for a rental car, the limit may be equal to the value of your vehicle. If the rental car values more than your personal car, then you may have to pay for the extra damage from your pocket. In such cases, calculate the amount of coverage that is not available and consider buying a supplemental insurance.

·         Several personal auto insurance does not offer coverage for business trips. Most of the auto insurance companies do not cover vehicles that are used to deliver business items like materials, supplies, food, etc. if such is your case, call your insurance provider and get an answer.

·         Insurance coverage for long term rentals is very tricky. Most of the credit card companies offer coverage for 30 days maximum, so what would you do if you need a car for a longer period of time?

·         Coverage by your auto policy and credit cards may not be valid for foreign countries. Look out for the other options available.

·         Some special types of cars and vehicle may not be covered under the rental insurance provided by the credit card companies as well as you auto insurance. Check it well before hiring a car.

Often times, you face situations where you have no other way than to buy additional insurance. If you are in such a situation, get in touch with a third party insurance provider and ask about the available options. Many times you can get policies equivalent to the insurance offered by the rental agencies but at cheaper rates. Why would you spend extra, when you can save money by buying smart? Do some extensive research on available rental insurance and shop around to find the best insurance policy with best rates.

Reasons You should not Take Additional Rental Car Insurance
Buying a car rental insurance is the trickiest decision that you have to make while renting a car. Many times people end up buying additional insurance that they actually don’t require and this adds something around £5 to £30 per day on their rental expenses.

According to National Association of Insurance Commissioners (NAIC), about 42% of the renters are unsure about the insurance coverage when they are out to rent a car. And 34% of renters among them will buy additional insurance to make sure they are well protected while they drive, even if they have to pay excessive money. This automatically helps the car rental agencies to rake up their profits.

People make this mistake since they don’t know their auto insurance well. They are also unaware about the benefits provided by the credit card companies. Even if they are not completely covered, some form of protection is always available. The leading credit card companies like American Express, Discover, Master card and Visa, all offer car rental insurance and are ranked 1st, 2nd, 3rd and 4th respectively, based on the how clearly they mention the coverage and how easily can the claims get paid.

These companies offer collision damage and theft protection on rental cars as a perk for being a member with them. To make sure you make the credit card coverage available, you have to use your credit cards to pay the entire rental bill. You cannot buy a supplemental insurance from the rental agency. If you mistakenly, buy one the credit card benefits for rental cars become void. Even though such benefits are available, 1 in 4 consumers are in totally unsure about the coverage provided by their credit card providers.

Rental car coverage offered by credit card companies have their own limitations, so you should know the types of cars covered, the extent of coverage provided, before you rely on  credit cards for protection. Some companies will not pay for damages done due to driving on unpaved roads, while some others would not consider exotic cars and vehicles with open beds like trucks. Many credit card companies would cap the rental duration at 15 days, while others would offer coverage for a maximum of 30days and no more.    

Here is a glimpse of the rental car coverage offered by the leading credit card companies:

·         American Express: All types of cards issued by American Express offers insurance and rental coverage for damage to tyres and rims, towing charges and accidents that occur due to driving on dirt and gravel roads. In most cases the coverage is available for 30 days. The company also provides coverage for loss of use of the rental car and insurance deductible. The limitations are – some type of cars like SUVs, trucks, etc. are not covered.

·         Discover: The rental coverage provided by the cards issued by Discover end up to 31days. Loss of use on the auto insurance is not covered, while coverage is available for damage to tyres and rims, towing charges and accidents occurring due to dirt and gravel roads. Vans, trucks and luxury cars are not covered under the rental insurance provided by Discover.

·         Master Card: Rental insurance is only available for the World cardholders. For World cards the covers lasts up to 15days and for World Elite card holders the coverage is available for 31days. The towing fees, damage to tyres and rims are covered and accidents occurring on dirt and gravel roads that are well maintained by the city are covered. Insurance deductible and loss of use is covered, but no protection for trucks, vans and luxury cars are available.

Visa: The rental insurance benefits are available for all types of card holders. Insurance deductible, towing charges and loss of use are covered under the rental insurance. Accidents on dirt and gravel roads are not covered and the coverage is available for 15days domestically. Coverage for damage of tyres and rims are also not covered. Vans, luxury cars and trucks are not covered under the rental insurance offered by Visa.
In many countries like Italy, Ireland, Australia, Jamaica, etc, credit card rental insurance is not accepted by the rental companies. If you’re going on a business trip, make sure your personal auto insurance offers coverage for business car rentals.

Why do the car rental staffs pressurize you to buy additional insurance, even if they know you are adequately covered by your own auto insurance or the credit card company you are using!? Here is the reason why they will:

The car rental insurance offered by the car rental agency is highly priced. Much more than what you can obtain from a third party insurance company. Insurance is a high margin item for the rental agencies. Being able to sell rental insurance, the car rental agency is able to make huge profits just like the other rip-offs which include GPS navigators, extra child seat, prepaid gas charges, etc.

The truth is that the rental agencies obtain these insurance for very less but sell them at high rates to their clients, which increases their daily rental bill considerably. Selling products other than the car and the mandatory insurance coverage is essential for the employees for their livelihood. Many employees feel guilty about doing so, but in order to get promotions and salary hikes, they have to show high sales on their part.


Conclusion
Rental car insurance can be the biggest car rental rip off. When you stand at the car rental counter, you be offered with various forms of the same rental coverage and you’ll be expected to make the decision in a fraction of a second. There will be hundreds of people standing in the queue, pushing you to complete the formalities fast and on the other side of the counter will be a person persuading you to sign a contract with the rental insurance offered by them – this might make you go insane, but you will have to make the decision under this tremendous pressure.

To make the process smooth, review the auto policies and credit card benefits thoroughly before leaving your home. If you find you don’t have enough coverage, talk to the insurance providers and know about other options. Under all circumstances, insurance bought from a third party provider is cheaper than that bought from the car rental agency. The rental insurance offered by credit card companies is secondary, so make sure you evaluate the auto policy well.

If you already own a car, chances are that you have enough coverage and there is no point in buying additional rental insurance. But if you see, the employee takes you to a point where you have no other option than to buy rental insurance, choose the CDW or Collision Damage Waiver and nothing else. All other types of insurance offered are utter wastage of money and will be covered under the health, homeowners or car insurance policies that you already have.

Remember, when you are on a vacation, you are prone to spend more than what you have decided – shopping, sightseeing, outdoor activities, there is a lot that you have to explore. So it is wise to keep the rental costs minimum.  Carry your essentials, know your insurance coverage and return the car with a full tank – this ensures that most of the rip-offs are taken care of.

Author Bio: Vineet Agarwal has been long associated with V1 Technologies which offers world class Website Design, SEO & PPC, Domain & Hosting, Mobile AppDevelopment and other similar services. Aside from being a dynamic entrepreneur, Vineet is an avid traveller and loves exploring new countries and culture. Discount car rentals interest him largely and he has been extensively sharing his knowledge with friends and peers about discount car rentals and mistakes to avoid when hiring cars. 

1 comment:

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