For us city dwellers who gave up our cars, insuring rental cars can be confusing and maybe unnecessarily costly.
It pays to know before you’re standing at the counter whether a non–car owner can get by without the insurance the rental car companies push on you. Before renting a car for a recent one-week trip to suburban Indianapolis, I reviewed the advice for people who don’t have personal auto insurance.
First, let’s look at insurance for a traditional rental from the standard companies like Budget, Avis, etc. We’ll get into nontraditional car renting at the end.
The salesperson is not likely to tell you that the rental car company is required in nearly every state to carry the state’s minimum liability insurance, which covers injury to people, other vehicles, and property when the accident is your fault.
In Illinois, according to the secretary of state’s office, rental car companies must carry at least 50/100/50 liability insurance, higher than that required for personal autos. That means coverage of up to $50,000 for causing bodily injury or death of one person, $100,000 for causing injury or death of two or more people, and $50,000 for damaging property.
You’ll need to find out the minimum liability required in the state where you’ll be renting the car. You won’t be breaking the law by declining supplemental liability insurance (SLI), but are the state’s required minimums adequate for you?
If you don’t own a lot, you might comfortably say no to extra liability coverage, since the other party in an accident would not reap much from suing you. But if you have significant assets, you may want more protection in the event of a lawsuit. SLI provides up to $1 million in liability protection, more than most owners have on their own cars. It costs around $15 a day.
An alternative to buying extra liability protection from the car rental company may be using your employer’s travel services, if allowed to do so for personal travel. As a Northwestern University retiree, I am able to rent cars through Northwestern’s contracts. The liability insurance is better than the state minimum but less than SLI coverage.
Nonowner liability insurance policies are sold by some companies, but their premiums are too high to make sense for any but frequent renters.
Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW) insurance
When you pay for a car rental with certain credit cards, you are covered for damage or theft of the car you’re driving.
But once again, research is in order, since coverage varies with the credit card. It’s worthwhile for non–car owners who frequently rent vehicles to shop around for a credit card with good collision damage provisions, since the rental companies’ CDW insurance is expensive — $10, $20, or more a day, depending on the car and the location.
Unlike the other main credit card companies, MasterCard does not offer rental car insurance on all of its cards.
Not all cards cover towing, loss-of-use (a fee for the time a car is in the repair shop), and administrative fees.
Also look for any exclusions, including certain vehicle types, longer rentals, and foreign rentals, and unusual limitations, such as Visa’s and MasterCard’s not covering accidents on unmaintained dirt and gravel roads.
If the company describes its rental car insurance as secondary, ask whether it becomes primary for people who don’t have a personal auto insurance policy. It should.
For a credit card’s CDW or LDW coverage to be in effect, you must decline the rental company’s coverage.
Personal property insurance
Personal property insurance is just what it sounds like — coverage for theft or damage of your personal property in the rental car. You probably are already covered for this by your homeowner’s or rental policy, but again, it’s a good idea to doublecheck.
Newer forms of car rental
As I looked into insurance for renting a car for a week, it occurred to me that I’ve never done the same for renting a car for an hour through a “car-sharing” company. I’ve always assumed that the insurance included with the fees of Enterprise CarShare (formerly I-Go), where I’ve been a member for years, is adequate.
In fact, Enterprise CarShare’s rental fees include just the state-required minimum liability insurance, along with damage coverage, minus a damage fee.
So, the advice with car-sharing alternatives is the same as with a traditional rental: If you have few assets, the minimum liability level may be enough. If you have considerable assets and don’t want to risk losing them in a lawsuit, you can buy the supplemental liability insurance that the car-sharing company offers.
Or an Enterprise CarShare member might switch to its rival ZipCar, which, I recently discovered, includes better liability insurance in its rental fees.
I’ve also used Turo, which allows owners to rent their private vehicles. Turo rentals include the state-required minimum liability insurance but not any coverage for damage to the vehicle driven. The company sells two levels of optional coverage and advises renters to think carefully before saying no. Don’t assume your credit card company or the owner’s policy covers you, Turo’s website says. I bought its insurance when I used the company for a two-day rental last Christmas. For the recent week’s rental, the lowest cost I found on Turo with insurance didn’t beat the price I found on Budget.
In sum, if you don’t have personal auto insurance and are renting a car, don’t make any assumptions about how you are or are not insured. It’s tedious but important to do the research before booking the car.