Knowing whether you need to purchase car rental excess insurance is a good start when you decide to rent a car. Making sure you’re protected if there’s an accident is important, but do you need the extra car rental insurance options that are offered when paying for your rental? The short answer is not always. But let’s find out more.
What is car rental excess insurance?
Car rental excess insurance cover (or supplemental car rental insurance) is a protection plan for a fee that provides coverage for out-of-pocket expenses you may incur if there’s an accident or damage to a car rental. Rental agreements can include an excess amount or high deductible that you are responsible for if a rental car is in an accident, stolen, or damaged.
How much is the excess you have to pay for your car rental?
Car rental excess cover or deductible amounts can vary wildly. Factors include the rental company, the rental car type, the location and the rental agreement terms. Excess amounts are usually outlined in the rental agreement and can range from a few hundred to thousands of dollars.
What is covered by car rental excess insurance?
Depending on the policy’s terms and conditions, the insurance can cover some or all the costs should you get in an accident.
How does it work?
In the U.S., car rental companies will typically offer four types of coverage:
- Liability coverage: This can vary from state to state but it is meant to protect you if you hurt someone or damage property during an accident.
- Collision or loss damage waiver: The waiver helps cover the cost if you damage a rental car.
- Personal effects coverage: This covers personal belongings if they are stolen from a vehicle (though it’s worth noting if you have renters' or homeowners’ insurance, this will typically be covered).
- Personal accident coverage: This covers medical bills if you or your passengers are injured in a car rental accident.
In Europe, rentals nearly always include liability coverage, but not the risk associated with damage to the vehicle itself or theft. Since your personal U.S. auto insurance will not apply in Europe, you will have three main options:
- Buying a collision damage waiver from the car rental company
- Using zero-deductible collision coverage that comes with some credit cards
- Purchasing collision coverage through a travel insurance provider.
Do I need a car rental excess insurance?
This depends. If you have liability and comprehensive insurance for your vehicle, the coverage likely extends to when you are driving a rental car in the U.S. for personal reasons. If you’re traveling abroad, for business purposes, or simply want more coverage, you might need extra rental car insurance.
In Mexico, for example, you must buy extra coverage from a travel insurance provider or a rental car company to satisfy the mandatory insurance requirements.
Other instances where you will want to consider purchasing extra insurance include if you don’t own a car and you rent one occasionally (in this case, you probably don’t have personal auto insurance), or if your personal policy only includes liability insurance and not comprehensive or collision coverage.
What is the best way to cover rental car excess?
One of the best car rental excess insurance options or ways to cover rental car excess is to buy insurance from a third-party company. The price for extra protection insurance can be lower than buying additional coverage from a rental company.
The only downside is that if the car gets damaged, you’ll have to pay the rental company first and then claim it back to your insurance.
The collision damage waiver as an alternative
Car rental companies typically offer a collision damage waiver when you make an online reservation and again when you pick up the vehicle. When you buy one, the company forfeits the right to charge you for damages to the rental car, but note that CDWs typically don’t cover tire and side mirror damage or damage from “gross negligence,” such as speeding or driving while intoxicated.
Conclusion
Hopefully, we've taken the headache out of the rental car process at home and abroad, and if you're ready to rent a car for your next vacation, we're here to help.
