Avoid paying extra to insure a rented car

Your own auto insurance may provide coverage

On the Money

Your Money

January 25, 2004|By Lorene Yue | Lorene Yue,YOUR MONEY STAFF WRITER

There's the high-pressure sell, followed by a flash of panic - should you spring for the extra insurance when renting a car?

Taking everything they offered could mean doubling the rental cost, but declining the option isn't always the smart thing to do.

Only 20 percent of renters choose to take the optional coverage, and it's hard to tell if they know what they're doing or are just too cautious. It turns out some people have good reason to take it.

"There are a lot of people who rent from us that don't have a car, don't have their own insurance coverage, have a large deductible or have had a lot of accidents," said Christy Conrad of Enterprise Rent-A-Car. They're all candidates for the extra coverage.

On the other hand, if your own car insurance has a deductible of less than $500, or your credit-card company covers your deductible, you probably want to skip the option.

Either way, you've got to understand what your auto insurance policy will cover before renting a car.

The time to learn about insurance options is not when travel-weary folks are queuing up behind you, so familiarize yourself with the options.

Most rental companies offer three basic products that are bundled or sold separately. Prices vary by area, rental agency and type of rental vehicle.

Additional liability insurance can cost about $10 a day to provide coverage for personal injury, death and property damage. It kicks in before the renter's own auto insurance policy. Don't have auto insurance? You can still get a car, but you'll want to spring for the additional liability or else you'll be paying out of your pocket to cover any expenses related to an accident.

Collision-damage waiver, or loss damage waiver, absolves the renter of any damages to the rental vehicle. It also releases the renter from having to cover the cost of the agency having one less vehicle in its fleet. The cost can range from $10 to $14 a day based on the value of the vehicle.

Renters who have personal collision and comprehensive coverage should be covered by their own auto insurance. Although that policy might not extend to the rental agency's loss of the vehicle, states have limited how much the rental company can put you on the hook for. For specifics, check with the attorney general's office in the state where the car is being rented.

Personal accident insurance will pay accidental death and emergency medical benefits for the renter and any passengers. It can cost between $3 and $7 a day based on the vehicle. Your health insurance will take care of you in an accident, but it won't cover any of your passengers. (They're likely to have their own health insurance, of course.)

Personal-effects protection will replace, up to a certain amount, any items that may be damaged or stolen from the rental vehicle. Check with your auto insurer to see if your policy provides the same protection. If not, opting for this costs about $2 a day.

Don't pay an extra penny until you've checked with your auto insurer; your company, if you're traveling on business; and your credit-card company.

Most business travelers are covered by a corporate policy, and credit-card holders who use plastic to pay the tab may be covered automatically.

However, none of the credit-card programs provides liability coverage, and their additional protection kicks in only after the renter's personal auto insurance has been tapped out (if the car is rented in the United States).

If you're renting a vehicle overseas, then your credit-card company will provide primary coverage. In either case, there could be a limit to how much the credit-card company will cover.

Lorene Yue is a reporter for the Chicago Tribune, a Tribune Publishing newspaper.

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