Car Rental Insurance: When Can You Say No?

Nothing to kickstart a vacation like that eternal question: to grab the rental car insurance or not?

vacation kayaking travel

Say NO to high car insurance premiums! Click to compare hundreds of quotes instantly →

You’re standing at the car rental counter, under those bright lights, with the perky agent telling you all about your rental car, the rules and costs regarding the gas and mileage, and then the agent becomes very serious. Almost as if picturing you—poor, poor you who just wanted a nice vacation or an easy quick trip—standing by the side of the road, a smashed and smoking rental car by your side, and though it’s that way through no fault of your own, you now must pay for Every. Single. Repair out of pocket because you didn’t get the oh-so-easy car rental insurance offered at the counter. You agree with the agent that $20 or so a day is nothing for some piece of mind, you sign, you drive off, and you probably don’t give the whole thing a second thought. Your bank account might be a little smaller, but, you figure, you had no other choice.

But what if it could be different?

Paying $20 a day for, say, a week, might not sound like a lot–$140 now, to avoid the potential of thousands in repair costs later—but if you paid $20 a day to your insurance carrier, you’d have a $600 a month policy. Outrageous, right? We think so, too. Lucky for you, Quoted has alternatives, so you can tell that perky agent “no” with the assurance you’re still covered in the event of an accident.

First Things First:

You need to know what kind of insurance the rental car company is offering you because the lingo can make your head spin, especially when you’ve just gotten off a plane and in your mind, you’re already on the beach, Mai Tai in hand. Rental car companies offer customers a Collision Damage Waiver (CDW) or a Loss Damage Waiver (LDW)–so you’ll need similar coverage from somewhere else if you’re going to turn down the agent.

Alternatives to the Rental Counter Price Gouge:

Your current car insurance policy

Many car insurance policies cover rental car damages. Check the fine print—or call your agent and have them explain all exclusions—because unless you’ve paid a premium specifically for rental car coverage, your regular insurance likely won’t cover everything, you’ll still have to pay your deductible, and your rates are sure to rise afterwards. Many rental car companies fight for every possible repair, and often your insurance won’t cover extra fees. For example, many rental companies now charge customers a “loss of use” fee–if your rental needs repairs, you’ll be on the hook for the company’s lost revenue while the car was in the shop, and most auto insurance won’t pay for it. This is actually one of the ways those car insurance agents get you to pay for their insurance: their reputation for ruthlessness often precedes them, so customers cave and take their expensive insurance in the hopes of avoiding a hassle.

Customers cave and take their expensive insurance in the hopes of avoiding a hassle.
Coverage from your credit card

You thought your credit card was only good for was raising your APR without any warning, but it turns out many also come with useful perks. Many credit cards include rental car insurance, but there are often several rules you must abide by so be sure to check ahead of time. A few to look out for:

  • Many credit cards offer secondary rental car insurance, which means you’ll have to make a claim with your carrier first (which will increase your rate), and then your credit card company will cover additional fees (such as those “loss of use” fees)
  • Most require you pay for the rental car with the credit card you want to cover you in the event of an accident
  • You’ll need to entirely decline the rental company’s CDW or LDW
  • The owner of the card must be the primary driver of the car

A few credit cards offer primary rental car insurance, meaning you wouldn’t have to file a claim with your insurer, and others (like American Express) offer optional primary rental car coverage programs you can enroll in for a one-time fee. If you have one of these cards, call the company, be sure you understand all the requirements and limits of coverage, and you should be good to go.

How to Avoid All the Hassle:

Calling your insurance company, calling your credit card company, working with both in the event of an accident, dealing with the nickel-and-diming rental car company on top of it all—it’s enough to make anyone need another vacation. So if you want to avoid the hassle, and still have inexpensive yet comprehensive coverage, check out one of the many new online companies and apps that are popping up. One in particular that we like: These folks offer substantial coverage and options, and we find it easy to use and understand. Some perks:

  • You can purchase insurance up to one day before you’ll need it
  • Policies start at $5/day, $17.50/trip, and $94/year
  • They offer Collision Damage Waiver (CDW) and Loss Damage Waiver (LDW) insurance policies for rental cars used in the US and to US residents for use overseas
  • When you enter your info, they tailor results to what’s available to you based on where you live and where you’re renting the car
  • Upgrade and you can add roadside assistance and family members to your policy, as well as additional coverage

You’re almost on your way:

Planning ahead just a bit for your trip will save you a lot of cost and trouble in the event of an accident. We suggest taking proof of coverage with you when you pick up your rental car–whether it’s from your current car insurance policy, your credit card, or an outside insurer–it’ll help you avoid a lot of back and forth with the agent, and you’ll be prepared just in case you end up needing it. Then you can drive away with the confidence of the properly insured, with some extra dough in your pocket to make your trip a little sweeter.