“The Ferrari’s $2. The extras will cost ya” (Should you buy car-rental insurance?)

There’s a Seinfeld episode where Jerry gets to the rental car counter and realizes that they do not have a car waiting for him, even though he made a reservation.  Turns out, not having a car when you go to the rental counter is not the thing that you have to fear the most when you are out-of-town and in need of wheels.  Unfortunately your biggest worry is what to do about the insurance monster.  This ugly thing is in the form of a hefty fee (that is usually higher than the daily rental fee for the car) coupled with a massive dose of self-doubt and second-guessing that will last until you turn the car in on the day you leave.

Author’s note of angst: self-doubt and second-guessing eludes many of the folks reading this, I’m sure.  Some of us though have these feelings as a baseline.  As in “today was great.  I only had a little self-doubt around lunchtime.”

It’s how much?

One of the most important tasks we have when ordering something on the phone or from the net is to verify what the actual final charge will be.  “Can you tell me what the total is again?” should be the last thing out of your mouth when you are ready to hang up from the reservations desk.  That way you can hold the rental car company (or hotel; or cruise; or swanky boat-tour) to their word when you show up and slide your credit card across the counter.  (We asked when we called about the car, we really did.)

  • We were ready to say No when they asked if we wanted to check the “return-the-car-without-gas-and-we’ll-charge-your-card-later” box.  This is when they entice you to give them your permission to fill up the tank with their own gas because it’s more convenient for you.  What they don’t tell you is that this gives them permission to charge you insane amounts for a gallon of gas (3 times the price is not uncommon)  Your best bet for gas is to find a station close to the rental counter and leave yourself an extra 20 minutes or so to get gas at the end of your trip. (But stay away from the stations right next to the airport.  Those people are just thieves with gas pumps)
  • We were not prepared for the extra-authorized-driver fee.  This puppy cost $11.00 per day and is a MUST HAVE if you are not the only driver.  Since Mrs. Consumer Courage was thinking “I might want to drive at some point,” we bit the bullet and signed up for the extra-driver fee.  (We didn’t want that $77.00 anyway).
    • This is probably a good spot to have everybody promise that they will never (EVER) let someone who has not signed the contract as an authorize driver get behind the wheel.  They’re not asking for the names of any other drivers to be nice.  Whichever insurance company is on the hook for any damage to the car will be all-too-happy to say “I’m sorry, we’re not paying your claim because the car was being driven by an unauthorized driver.”
    • Don’t forget to ask the rental clerk if the hotel valet is an authorized driver, by the way.  Most likely they’ll say yes.  Even if you’re not a valet person, when you stay in a downtown area you might not have a chance to park the car yourself.
  • Since our clerk said “You don’t have to worry about tolls.  They are camera-operated, minimal and will be charged to your credit card,” we didn’t ask if there was a state-authorized highway toll-pass that we could put into the car while we had it.  But, some rental contracts have hefty per-toll charges if you do NOT buy the state-run highway toll pass.  Ask about this and say “What’s the cheapest way we can pay for any tolls?”  Have an entire conversation about this and don’t leave the issue until you understand exactly what’s going to happen when you pass through a toll booth, whether you are going to get charged and how to do it the cheapest way you can.
    • Some areas still have toll booths.  But some areas just have cameras that zap your license plate and tack on minimal charges.  You should understand how this works and whether the rental company has a provision that hits you with extra charges after you turned the car in.
  • There are a host of extra fees that the City council wherever you’re going has already planned to stick you with.  Stadium charge; Airport drop-off surcharge and Visitor fee are all examples of legal add-on fees.  You can’t avoid them.  But you can ask about them when you make your rental just to see how much they are and to compare.
  • We didn’t even think to ask if there was a rental counter NOT located at the airport that might be cheaper.  Airport rentals tend to be more expensive because of the fancy taxes we just talked about or just because the rental people jacked up the price at the airport counter.   Make some calls to see how far the next-closest rental counter is.  But finding a cheaper rental counter is half the battle.  It’s only worth it if you can get there and pick up the car for an amount that is less than what you are saving.
    • If your flight lands at 10:30 p.m. and it’s a hundred dollar cab ride to the other place, it might be worth it to use the airport counter. Figure in the cost to get back to the airport on the day you return the car as well.  On the other hand, if there’s a rental place right next to your hotel and a shuttle bus will take you there from the airport you’re in business.
  • We forgot to ask “Do you have discounts for AAA, AARP, etc.”   When you make reservations keep asking the clerk if there are any discounts available or ways to make the rental cheaper.
    • No, we don’t belong to AARP.   But when there’s a knock at the door at odd hours, we realize it’s only a matter of time.
  • “OK sir, do you want to buy insurance for the rental car?” sounds like a simple question but there are a lot of questions to ask.  And a lot of things to watch out for.

Prepare thyself

This is an issue that you should think about before you leave home.  If the first time you consider your options is when you stroll up to the rental counter after a long day traveling, it’s not going to end well.

Editor’s reality check: If you’re travel habits are anything like the Consumer Courage family, you’ll also be tired (because you were up til 2 packing); hungry (because you forgot to eat breakfast and “were not about to pay $8.00 for a ninety-nine cent bagel” at the airport); thirsty (because they treat water like it’s gold bars on the plane) and a little bit irritated at how long you had to wait for your bags.

The point is, you’re gonna wanna make this decision from the comfort of your own home, instead of at the rental counter at 11:30 p.m.  There are several questions that you need to answer to figure out whether you need the extra insurance.

  • What kind of car insurance do you have?
    • How extensive is your coverage?
  • What kind of credit card will you be using to rent the car?
  • What kind of car do you need to rent?

Unavoidable primer on insurance

(As many of you realize by now, digression is not an unwelcome guest for Consumer Courage.  And rare are the times when we take tangential journeys to discuss things-legal.  This one of those times).  There are a few basics about car insurance that we all should know before going any further

  • Collision coverage describes the insurance company’s obligation to pay for damage to YOUR car;
  • Liability coverage describes their obligation to pay for damage to the OTHER guy’s car;
  • Medical payments coverage describes their obligation to pay for hospital and Doctor bills from mishaps that happen on (or near) your car;
    • By the way, this is the cheapest thing to add to your auto-policy and will cover injuries that you can tie to your car.  Ask your insurance company how much this is and give it some serious thought.  Med-pay coverage will pay for some of the things that your health insurance won’t cover and might even cover injuries not caused by an accident.
  • Minimum state-mandated coverage is an amount (usually pretty low) that each state determines is the lowest amount of liability coverage that each driver should have. (there are no minimums for collision coverage.  States could care less whether the wreck you cause will fix your own jalopy)

Most auto-insurance carriers will cover a rental that you obtain.  But here’s the rub: the rental is only covered to the extent that your own car is.  If you signed up for only minimum coverage in your home state you might need to update your policy before you get the rental.  If you have uttered the phrase “my car’s not worth much, so I don’t need to waste money on collision coverage, you shouldn’t be relying on that policy to protect your rental car.

Where were we?…

Oh yeah, your own coverage.  What’s important when you rent a car is not just that you have insurance coverage.  It’s that you have ENOUGH coverage.  If you have the minimum coverage in Ohio and drive a 1992 LeCar (don’t laugh, they’re still out there), you probably don’t need collision coverage at home.  But that $12,500.00 in “liability only” coverage will not fix your rental, leaving you in a bad situation if you get into a wreck.   The first thing you need to do is see how much coverage you have and make the necessary changes it so that it’s fit for a rental.

Let’s do some math.  If you are going to have the rental for a week and the rental company charges the typical amount for insurance, you’re likely to pay $30.00 per day.  The question now becomes, can you update your own auto-policy for less than $210.00?  Remember: if you beef up your coverage for the week that you are renting the car, you can change it back as soon as you get home.  If that happens, the insurance company has to credit you for the amount of unused premiums.  Ask them how much 7 days of the beefed-up coverage will be and if you can reduce the extra coverage when you get home.

Will that be paper or plastic?

When you reach for your credit card to pay for the rental, don’t just grab the one with the most cash-back or the most bonus points.  Reach for the one that will protect you for the rental.  Many credit cards offer supplemental coverage for car rentals as long as you use their card to purchase the rental.  According to the  2015 credit card study by Card Hub  American Express is the best, followed by VISA and then MASTERCARD.

The Discover Card is also mentioned – but only so they can say “don’t use Discover to rent a car.” Discover offers no protection for a rental car.  They may give you loads of cash back at the end of the year.  But they are not your friend when you are standing at the rental car counter.  AmEx is the best because they act as the primary carrier for any mishaps while driving a rental.   This means they will step in first so you might not even have to use your auto-carrier, which is sweet.  AmEx and VISA both have “loss of use” coverage which means that IF you have a wreck, they will pay the rental car company for the time that the car is out of commission while it’s being fixed.  (Loss-of-use is when they charge you the per-day rental cost while their mechanic is taking his good-ole time fixing the bent fender casing from when you dinged the wall at the parking garage.)

There are limitations on how much coverage your credit card provides.  Most of them are time-limited (usually only good for rentals of less than two weeks) and you’re probably not covered for cars rented outside of the U.S.  For some reason which escapes us most credit card rental coverage excludes giant vehicles (Lincoln Navigator; Suburbans; other extra large SUV’s and pick-ups)  Check the list to make sure the vehicle you want to rent is NOT an exclusion.

What should you do before you get on the plane?

Start your research by calling:

  • Your own auto carrier.  Tell them that you’re renting a car, verify your exact type of coverage and see what exactly extends to the rental.  Ask about the types of coverage and whether it is comprehensive enough.  “Can I sign up for this, how much is it and how quickly can I cancel?” should be on the tip of your tongue.  Ask about collision (if you don’t have it), extending liability (if you only have minimum coverage), medical payments coverage (just in case), and loss-of-use coverage for the rental if it has to get repaired.
  • Your credit card company.  Ask them to verify that they will provide secondary car insurance coverage for a rental if you use their card to buy it.  Are there exclusions? Do you have loss-of-use coverage?
  • Is the rental being picked up by your work? If it is, you need to talk to them about insurance coverage.  Your own carrier might not be so happy to pay for an accident if they even THINK that you were out of town on business.  If your work says “Just use your own auto-insurance while you’re at the meeting,” call your carrier and make sure they’ll cover you while you’re on business.  If your insurance company says they won’t, you need to talk to your employer about buying the extra insurance coverage from the rental company.  (Better to have this uncomfortable discussion now, instead of when you are holding a bill for $3800.00 in repairs and a denial letter from your own insurance carrier)

As with most important purchases, the more you plan ahead of time the better your decision will be.  Happy driving.

Posted by: Mark Wiseman (who actually drove to Florida two years ago. The only hang-up was when we drive 2 hours out of our way to find a car-wash….Don’t ask)