Spend a Little, Save a Lot: Rental Car Insurance

Spend a Little, Save a Lot: Rental Car Insurance

Sweet, sweet summertime.

This summer is especially sweet because, after a year of quarantine, we can finally go places.

We can go wherever we want. We can even go on vacation!

Where should we go? What should we do? When can we leave?

Amid all the excitement, if your vacation plans include renting a car, be sure your budget includes a little extra for the rental car damage waiver. As the old saying goes, “Spend a Little, Save a Lot!”

Here are the top three reasons you should always buy the damage waiver:

 The Credit Card Coverage Con

“Many people think that the credit card they use to rent the car provides the same coverage as a damage waiver from the rental car company, but it doesn’t,” says Bill Lawrence, CIC, and President of P/L/R Insurance. “In many cases, if you read the fine print, your credit card may only offer “excess coverage” on rental cars. That means that after your auto insurance pays the claim, your credit card company might cover whatever expenses “exceed” those provided by your insurance.”

Rates for the damage waiver vary from company to company. Still, the more touristy your destination is, the more the damage waiver will cost. For example, suppose you rent a car to visit family in Omaha. In that case, the damage waiver will be less expensive than if you’re renting a car in Las Vegas or Orlando.

“But we DIDN’T damage the car!”

Maybe you didn’t. But can you prove it?

“We’ve had clients get calls from rental car companies up to a week after they’ve returned the vehicle, and the company claims that they somehow damaged the car,” Lawrence says. “In those cases, consumers have little recourse, as the rental car company can simply charge the credit card you used to rent the car.”

They will often only deal with the insurance company, not with you directly (so you can’t pay for the “damage” out of pocket). That generates a claim against your policy, which will result in increased premiums for you, even if you sincerely believe that you didn’t damage the rental.

Making a DIY Move?

“More often, our clients rent a moving truck or a box truck to help them move to a new house,” Lawrence says. “Those situations can get muddy too.”

If you’re renting a pickup truck for the day, that is the same situation as signing up for a rental car, and your best bet is to buy the damage waiver.

If you’re making a more significant move and renting a box truck, be careful. Since box trucks are technically commercial vehicles, most auto policies will only extend limited protection. “We advise clients to buy both the damage and liability waivers from the rental company if they’re renting a box truck,” Lawrence says. “We also recommend checking with your insurance agent to see if you need even more coverage. Most people are not used to driving something that big, and it can be easy to have an accident.”

Buyer Beware!

Lawrence says he encourages clients to read the pamphlet that comes all folded up in the envelope you get from the rental car (or truck) company. “If people read the information in that little pamphlet, they’d either return the vehicle before they left the lot or run right back inside to purchase a damage waiver,” he says. “That is by far the safest and simplest way to rent a car!”

Of course, the choice is up to you, but if you decide not to pay for the damage waiver on a rental car, the consequences can be extraordinarily inconvenient (and expensive!). It plays out like this:

  1. You’ll have to file a claim on your auto policy (for a car that isn’t yours). After that, only the collision, comprehensive, and liability coverage from your policy will apply.
  2. You’ll be responsible for the deductible, just like you would if it was your own car.
  3. It will count as a claim against your policy, and your premiums could increase.
  4. The rental car company could charge you for renting the car for all the days the vehicle is in the shop, plus an additional daily “out of service” fee because they couldn’t rent the car to anyone else while it was undergoing repairs.
  5. The rental car company may also charge you for “diminution of value.” That means that if the car was worth $30,000 when you took it, you drove another 1000 miles, and now it’s been damaged, so it’s only worth $25,000. So, you may also be responsible for that $5,000 difference in the “value” of the car.

Like most things having to do with insurance, you’re not buying a product. Instead, you’re buying peace of mind when you purchase a damage waiver or another of the specialty products discussed here. Yes, it costs a bit more, but if anything happens and you’ve purchased the damage waiver, all you have to do is return the vehicle and walk away.

No harm. No foul. No ruined vacations. And no commissions for P/L/R, either. Just good advice.

If you’re ready to take a new look at your insurance coverage, call P/L/R today. Wouldn’t it be nice if you had a real relationship with your agent, and you could trust them for solid advice even when there’s nothing in it for them? At P/L/R, that’s the only way we do business. So, call us today for a quote or a free insurance review. You might even save some money!

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