Many travelers believe their auto policy back home or their credit card benefits will deliver the coverage they need when they rent a car, but the restrictions and limitations could surprise you.
For example, if you waive collision coverage and the car you rent is damaged or stolen, it doesn’t matter whether it’s your fault or not.
The rental company, or its collection agency/claims department, will assess fees based on its own policies, the local state laws, and what you agreed to when you signed the rental document. You read that very carefully while standing there, right?
Even more shocking? Most rental agreements require the traveler who signed the agreement to pay fees for any sort of damage to the car – blown tires, door dings, falling trees – no matter whose fault it is.
While the damage waiver protection you get at the rental counter is littered with exemptions, from high deductibles to all kinds of exclusions for property damage, there are problems with relying on your auto policy back home and your credit card coverage too. Some travel insurance plans cover rental cars, which we’ll get into in a minute.
1. Your auto policy back home can’t always help
Many travelers believe that their own auto policy will provide the coverage they need, but it’s important to note that the coverage you have back home carries over to the rented vehicle – same rules, different car.
This means your auto insurance typically leaves you high and dry when you travel when:
- You drive an older vehicle to work every day, but rent a shiny new one on your trip. Your policy limits may not be enough to cover a rented vehicle that is stolen or destroyed.
- Your auto policy doesn’t include ‘loss of use’ charges. These are the fees imposed by the rental company while the car is being repaired and cannot be rented.
- Your auto policy doesn’t cover ‘administrative fees’ and ‘diminution of value’ (the cost levied for lost resale value) charges either. Neither of these are well-regulated or even disclosed until an accident happens.
- Your auto policy won’t cover cars rented outside the U.S. – and most don’t.
2. Your credit card coverage can’t always help either
Some credit card coverage will pay for loss of use, but not many and those that do may require a fleet utilization log showing that the rental company didn’t have other cars to replace the one you rented – a piece of documentation that can be difficult for a traveler to get from the rental company.
Unfortunately, there are other concerns about relying solely on your credit card benefits for rental car coverage, including:
- Credit cards also don’t cover administrative fees or diminution of value costs, which can be quite substantial if the car is battered but still functional.
- Credit card coverage is typically secondary, and a major accident could raise your auto insurance rates back home.
- Credit card  benefits also have policy limits that may not be enough if you rent an expensive car.
- Credit card coverage applies only to the vehicle, not to personal liability or personal injury.
- Only some credit card benefits apply to cars rented outside the U.S. and most don’t cover theft or vandalism at all.
- You can’t rent a motorcycle, truck, SUV, exotic, antique or off-road vehicle with your credit card and have coverage. Same thing applies to recreational vehicles and campers.
- Credit cards limit the duration of your coverage, typically 15-30 days.
3. Where you should not buy your rental car coverage
Now that we’ve scared you into paying attention, we also want to caution you against buying coverage at the rental counter for at least two important reasons:
- Rental car coverage purchased at the counter typically costs more than double the typical travel insurance collision coverage costs ($7-$9 per day versus the $18-$21 or more at the counter).
- You won’t have the time to review and understand the limits and exclusions. With a travel insurance plan that includes car rental collision coverage, you’ll have a review period to read and understand your policy.
4. Why collision coverage with a travel insurance plan is better
Rental car collision coverage with a travel insurance policy gives you broader coverage than your credit card: it pays up to the policy limit (usually $25,000-$50,000) if your rental car is lost or damaged as a result of:
- accidents
- theft
- vandalism
- riots
- natural disasters
- fires or explosions
Plus, this coverage will pay for loss of use charges too.
It’s also primary coverage, which means it will pay up before your other insurance, so if there are charges left over you can combine them and (hopefully) cover the entire loss.
While car rental collision coverage in itself doesn’t pay for the loss of personal possessions, a complete travel insurance package – one with baggage protection, that is – will repay a traveler for that loss (up to the policy limit).
5. Where collision coverage with a travel insurance plan falls short
Car rental collision coverage with a travel insurance plan falls short in a few areas too. These losses are excluded:
- damage to another vehicle, structure or person
- damage as a result of mechanical failure or breakdown
- any consequence of war or contamination by radioactive material
- damage that occurs while under the influence of alcohol or any illegal substance
Then again, most of these aren’t covered by your auto insurance or your credit card protection either.
Only your auto insurance policy back home may cover personal liability and property damage, and only if you are renting the car within covered regions and have followed all the expected rules of the road.
See our full review of car rental collision coverage for additional details.
