How to Find Budget Friendly Rental Car Insurance Coverage

Ron Trumbo Insurance Editor

Renting a car, whether for business or for vacation, truly exposes the average driver to the convoluted intestines of car insurance. If you read anything in this article, understand this: Always make sure that you are protected with some form of car insurance when you rent a car, and ALWAYS understand the terms and restrictions of your insurance coverage. When in doubt, have your insurance agent provide a review for you.

Responsibility and renting a car is simple: When renting a car, you are responsible for damage to the rental car that you cause by your negligent vehicle operation. For example, if you run a red light and damage the rental car, you will have to fork out the expense for all of the car's repairs.

If you are not insured by your existing car insurance policy or by your credit card, then you should consider purchasing the collision damage waiver. According to AMBest.com, CDW is a better option to pay about $8 to $11 per day rather than $15,000 to $20,000 to replace the rental car.

Also, you have direct liability for injuries or property damage that you cause to others while operating the rental car. If you roll through a stop sign and cause injury to others, or even put a dent in their car's fender for that matter, you will be totally at fault and responsible by law.

If something were to happen to your rental car, that you did not cause, be aware that most rental contracts still hold you responsible. Most rental car contracts make you, the lawful renter, completely liable for all damage regardless of fault. It's generally buried in the super-fine rental contract text, so take your time to understand this. To really hammer home this point, when you drive off the rental car company's parking lot, you are responsible for damages as seemingly innocuous as hail damage, damage caused by a vandal, and even a thief stealing your car. It's a simple formula: when you return the rental car, if it's not exactly how it was when you first go it (in the rental company's eyes), you will pay difference to restore it to its original condition. Imagine the replacement cost if your rental car was stolen or completely totaled beyond reasonable repair.

Here's the real hoot: As a renter, most rental car contracts hold you liable for the loss of revenues the rental car company incurs as a result of your car being unavailable for rent while being repaired. Do not be surprised if you are charged with sucker-punch of a rental car contract condition.

Before you rent any car, you should really understand what your existing car insurance policy covers. Generally, you can just give your agent or insurance company a quick call and ask them about the conditions of your policy. Remember though; make sure anything that you understand as part of your policy is in writing. For many policies (check your policy for your specific conditions), injuries and property damages that you cause are commonly protected up to your liability policy limits. For damage that you may cause to the rental car, most drivers are covered their policy if they have Comprehensive and Collision coverage. The terms of their Comp/Collision deductibles may apply of course. If you don't carry Comp and Collision on your car insurance policy, it is in your best interests to purchase the collision-damage waiver coverage from your car rental company.

The Rental Car Company's Collision Damage Waiver (CDW)
If damage happens to your rental car and you were not the cause of it, the same generally holds: if you have Collision and Comprehensive coverage on your car insurance policy, you will probably be alright. Again, it can not be stressed enough, that every responsible driver (You, if you're reading this) should check with their insurance company to understand exactly how their policy will protect them.

According to the Experts...
If you are not insured by your existing car insurance policy or by your credit card, then you should consider purchasing the collision damage waiver. According to AMBest.com, CDW is a better option to pay about $8 to $11 per day rather than $15,000 to $20,000 to replace the rental car.

If you do not have rental car coverage under your existing personal car insurance policy for damage to any car that may rent, regardless of cause/fault, you can generally purchase the optional collision-damage waiver from the rental car company. This is usually referred to as CDW (Collision Damage Waiver). For the average one-week vacation, rental company Collision Damage Waiver's cost between $70 and $150. Make sure you understand the restrictions though. Even if there are a hundred people behind you in the line at the rental car counter, take the time to find restrictions in the CDW contract. Most commonly, you will find restrictions for drivers that are no listed on the rental contract, including your husband or wife, or any friend or colleague that you plan to share the responsibility of driving with. Even further, there are frequently exclusions for driving outside a permitted geographic area, including to another state, operating the rental car in a careless manner, or damage caused by drinking and driving.

For drivers that rely on their own personal car insurance policy, the rental car Collision Damage Waiver may still be a good deal. For example, if you do not want your insurance rates to increase, a rental company's CDW can keep you from filing an auto insurance claim against your own policy. Everyone knows that any type of accident claim can affect your insurance rates upon renewal. Imagine if you already have a speeding ticket on your driving record, or perhaps a previous accident claim, if you file a rental car insurance claim using your personal auto policy, it would not be unheard of, to expect your insurance company to simply drop you as a policyholder.

Credit Cards and Rental Car Insurance
Perhaps one of the most misunderstood areas of rental car insurance coverage, involves insurance coverage from a driver's credit card. Some credit cards offer a very broad coverage, and then some super restrictive. In fact most credit card rental car insurance don't coverage rental damage until the cardholder can generate in writing (proof) that their personal auto insurance policy doesn't afford them coverage. In fact, the entire cost of the rental car dame can be charged to the credit car until the proof of no-coverage is provided. Insurance industry experts have recommended that drivers not rely on credit car rental car insurance unless it provides primary coverage and if it has no exclusions that could haunt you later on. It may behoove you to request a sample policy ahead of time and have a trusted insurance agent review it.

International Travel and Rental Car Insurance
It is generally safe to assume that rental car insurance policies purchased in the United States, do not cover the driver/renter beyond this country's borders. Accordingly, it is recommended that international travelers acquire as much rental coverage as possible when renting abroad. Such rental protection should include liability coverage for injuries and property damage, as well as comprehensive and collision coverage.

Important points to this article: rental car insurance, CDW, vacation accidents, credit card insurance coverage, vacation rental, rental car, rental insurance

More information online: Damage waiver, liability insurance, Insurance Information Institute