Demystifying Car Rental Insurance

Car rental insurance sometimes feels like a shake-down. You think your auto policy covers it, but you’ve never read the fine print and you really don’t want to end up in a Mexican jail, so you buy it anyway and drive away feeling like you’ve wasted money. Have you? Here’s what you need to know:

Domestic car rental:  Most personal auto insurance policies will extend the liability limits of your policy to protect you when you drive a car you own or when you drive a car you don’t own; (like a rental car or a friend’s car you borrow) when you drive in the US and Canada. Insurance in Mexico is a special problem and to play it safe we are recommending that you buy Mexican Auto insurance before you enter that country.

Foreign car rental:  If you rent a car in a foreign country, your US policy will NOT cover you for:

-          Liability

-          Comprehensive and collision

-          Medical

-         Uninsured and underinsured motorist coverage.

A client once emailed me from London to tell me that he had crashed his rental car. He hadn’t purchased insurance from the rental car company and wanted to know if he was covered by his US auto policy for collision coverage. He was NOT.

There are only a few companies that offer worldwide coverage; whereas this type of coverage may be right for the international business traveler, it’s expensive for those of us who seldom take a vacation abroad. For the infrequent foreign traveler, we recommend you buy complete insurance from the rental company you use and make sure it covers any and all drivers.

Credit Cards:  Most credit card companies provide domestic and worldwide coverage for damage to rental cars- IF YOU USE THEIR CARD TO PAY FOR THE RENTAL CAR. Luckily for my client in London, he had paid for his rental with his American Express card and they paid for the majority of the claim.

Credit card coverage has many restrictions, so READ THE FINE PRINT:

•  Many countries are excluded, i.e.: My client was covered in England but not Ireland.
•  If you get a DUI, your insurance may be invalidated.
•  There are usually many restrictions regarding accidents.
•  Platinum cards are important; the better the card, the better the coverage.
• Credit card coverage usually excludes liability for injury to the other driver and damage to his car.

Before you plan a trip, call Allied Brokers. We can review your auto policy, answer your questions and make sure you are covered. We are here to help you solve all your insurance problems!