If you’ve rented a car for a getaway trip this year, almost certainly you got something ranging from a guilt trip to a hard sell from the rental company agent to buy damage waivers and other supposedly “optional” insurance.
Rent-a-car companies now make 8 percent of all their revenue from these optional coverages, according to Auto Rental News. But a lot of consumers feel confused about what protection they really need and should pay for – and when they’re getting ripped off.
Someone who fields questions about rental-car insurance coverage all the time is Paul Burke, president of Hadley Insurit Group in Fall River. He’s been teaching classes about Massachusetts auto insurance for over 25 years with the Massachusetts Association of Independent Insurance Agents and has earned certifications as a Certified Risk Manager (CRM), Certified Insurance Counselor (CIC), and Licensed Insurance Advisor (LIA).
“All rental car contracts are very different, and you have to read them, and the problem is, most people don't want to read them,’’ Burke said in an interview at his office. “If they do, they don't understand them, and they're on vacation, and the last thing they want to do is spend an hour at the counter trying to figure out what's covered and what's not.’’
Examples of the numerous coverages you’ll be asked to accept or reject are likely to be collision damage waivers, limited damage waivers, supplemental liability protection (or additional liability insurance), personal accident insurance, accident medical coverage, and personal effects coverage.
Two that Burke says you can confidently turn down are supplemental liability coverage on your car rental, because “if you purchased the right limits on your personal auto policy, you should not have to’’ pay for liability coverage while renting, and personal effects coverage for your stuff inside the rental car. “It’s covered under your homeowners' policy if it's stolen, or your tenants' homeowner policy’’ or renters’ insurance, Burke said.
Depending on whether you pay for a car with an American Express card, MasterCard, or Visa, the credit card company may fill in gaps of coverage after what the rental car company and your personal auto insurer cover. But no two companies have the same rules, and coverage can vary by card issuer depending on what type of card you have.
Where it gets more complicated is deciding yes or no on damage waivers that can cost $15, 20, or $22 extra a day. They’re not insurance, exactly, but release you from having to pay to repair or replace a damaged car.
Many consumers know that, at least in Massachusetts, the comprehensive and collision coverage you have on your car will cover damage to a rental car you’re driving, too, and so you may not need to buy a damage waiver.
That’s true, Burke said, but “you will be responsible to handle the claim just as if it were your own car. Anything that is not covered by the Massachusetts auto policy but required by the contract -- you're going to have to pay that, and that is going to come off your credit card’’ and potentially max out your available credit until the rental company, your insurer, and you agree on what damage needs to be fixed.
Bear in mind that you will also void all insurance coverage on the car if you get in an accident while driving drunk, operating to endanger, letting someone not authorized on the rental contract drive the car, leaving the car unlocked someplace with the keys or ignition fob inside, or fine-print contractual violations common to rental car contracts like a prohibition on taking the vehicle onto a non-paved road – even if it’s a town-owned road in a place like Martha’s Vineyard or Vermont.
If you do get into an accident with a rental car and have your personal auto insurance collision and comprehensive cover it, you're looking at paying a $1,000 or $2,000 deductible towards repairs of the rental car, a hit to your driving record that will almost certainly drive up your future insurance premiums, and a lot of paperwork.
That's why Burke says for a two- or three- or seven-day rental, taking the extra $20-a-day waiver fee very well may prove worth it. (If you’re renting a car for longer, the expense quickly adds up, and if you rent a car for over 30 days, your regular personal auto insurer may stop covering the rental car.) Using a CDW to keep an accident off your permanent personal auto insurance record is an extra justification for paying it.
“I certainly recommend that anybody who’s going for a 3- or 4-day quick vacation that are renting a car buy the CDW … Usually, when you buy it, you've eliminated your financial risk for that car, in most cases. So once you've done it, if something happens to that car, you turn it in and walk away,’’ Burke said. It’s also, Burke added, a question of the value of peace of mind when you head off on a long-anticipated vacation: “I don’t want anybody to go on vacation and get in an accident on the first day – and their vacation is ruined.’’