Car renters often overdo car insurance

By Kathy Chu, USA TODAY



Feel run down by aggressive sales pitches for insurance at the car-rental counter?

You're not alone. Thousands of people will rent cars as Labor Day approaches and summer wanes. But many will pay more than they need for policies covering everything from car damage to stolen items.



Rental-car companies say the insurance can provide peace of mind on the road that if the unexpected happens, you're protected. But the four main types of coverage — collision, liability, personal accident and personal-effects insurance — cost up to $42 a day, according to the Insurance Information Institute in New York. That can be more than the price of renting the car.



"If you go on vacation for a week and buy auto-rental coverage, it could really add up," says Jeanne Salvatore, senior vice president at the insurance institute. "There are too many people who buy coverage they don't need."



A quarter of drivers buy rental insurance because they aren't sure of what their own auto policy covers, and 15% say they feel pressured to purchase these policies, according to a 2004 survey by Progressive, an insurer based in Mayfield Village, Ohio.



Do your research



Researching what you need before you get to the car-rental counter can help you save money. Some things to know:



• Collision-damage coverage, also known as a loss-damage waiver, protects you if the rental car is damaged or stolen.



But you probably won't need to buy it. If you own a car and have comprehensive and collision insurance, it likely will take care of damage to the rental. Check with your insurer to see if you're covered.



Many credit cards also provide this protection, although restrictions may apply.



Put the car-rental charges on any Visa or American Express, and you're generally covered. But this coverage may be secondary, which means that the credit card company will pay for what your auto-insurance policy doesn't.



Discover covers no more than $25,000 of damage to the rental car for platinum card holders. With platinum and gold MasterCards, the protection generally lasts for 15 consecutive days of the rental. Beyond that, you're on your own. Some MasterCard issuers also may choose not to offer this protection after Sept. 1, when the card association rolls out a program that makes it easier for banks to pick and choose which benefits to offer.



Some automobiles are exempt from the policy. American Express, for instance, doesn't cover what it calls "exotic" cars, including Ferraris, Lamborghinis and Maseratis.



If you buy a collision-damage waiver from the car-rental company, it's only in effect if you follow the rules; it may be void if you cause an accident while speeding, driving drunk or driving on unpaved roads.



• Supplemental liability protects you from damages for injuries or death to another person.



You may not need this if you are already covered under your own auto insurance or through umbrella home and auto policies. But if you only have the minimum state-required liability on your auto policy and want more coverage when renting a car, this could make sense, says Rick Crawley, a general manager at Progressive. "An argument could be made that if you're not in your home area, then you might not be as familiar driving" there and may need additional protection, he says.



On its Web site, Budget rental-car company touts the benefits of buying its liability coverage even if customers have their own policies: "By not having to file a claim under your own policy, you can probably avoid possible premium increases or even cancellation." Other companies have similar language in their rental brochures.



Robert Hunter, insurance director at Consumer Federation of America, says even if you don't tell your insurance company about the accident, it could still end up in the insurance-industry's database. That means that it could be reflected on your driving record.



"Even if it didn't get reported, why in the world would you want double insurance?" asks Hunter, the former Texas insurance commissioner.



States require rental companies to provide customers with a minimum level of liability insurance, but this coverage may not be enough if you are in a serious accident, according to the insurance institute.



• Personal accident insurance covers medical bills for you and your passengers. But you may be sufficiently covered by your health insurance or medical coverage under your auto policy.



• Personal effects insurance will pay for anything that gets stolen from the car. These items may already be covered under your homeowner's or renter's insurance. Buying this protection also doesn't make sense if the most valuable things in the car are your banged-up golf clubs.



If you hold an American Express Platinum or Centurion card, you are covered for damage or theft of your personal property for the amount that your own insurance policy won't pay.



• Some car-rental companies offer emergency sickness protection for foreigners traveling in the USA. This could be appropriate for non-citizens who have existing health conditions and don't have medical coverage, says Cindy Anderson, regional revenue manager at Dollar Thrifty rental-car company.



This coverage costs $3.99 a day at Dollar Thrifty and pays for up to $10,000 of medical care, including hospital services and visits to a doctor's office. Renters have to pay a $100 deductible per sickness.



Another option



If you rent cars often, do the math to figure out whether a "non-owner liability" policy from an insurer, which typically costs $200 to $300 a year, is cheaper than purchasing liability insurance every time you rent.



Generally, you'd have to rent a car at least 14 days a year and purchase liability protection every time for this policy to be worth it. This assumes that the rental company's liability coverage costs $9 to $14 a day, according to insurance institute estimates.



Insurance isn't the only area where you can save at the rental counter. Booking ahead, especially during busy periods such as Labor Day, can minimize the financial impact of renting a car for a weekend getaway.