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How to Avoid Rental Car Insurance Misunderstandings

Avoid Rental Car Insurance Misunderstandings
Allianz - Avoid Rental Car Insurance Misunderstandings

The rental car insurance you buy at the counter can be really, really expensive. A typical collision damage waiver (CDW) is sold for around $30 per day — “often more than the base car rental rate,” USA Today reports.1 A smarter solution is buying the Rental Car Damage Protector from Allianz Global Assistance, which gives you similar protections for as low as $11 per calendar day.

But rental car companies still hope you’ll buy their insurance. When the counter agent tells you that you'll need extra coverage, here’s what to say.

The rental car counter agent says: “Oh, we don’t accept third-party rental car insurance.”

You say: “You don’t have to accept it; I know I have coverage.”

The Rental Car Damage Protector can cover costs if a car you're renting is stolen or is damaged in a covered accident or while it's left unattended — and it can cover you almost anywhere in the world. Some rental car companies may not be familiar with rental car insurance from Allianz Global Assistance, but all you have to do is show the agent your plan documents. Or, have them call us for confirmation that you have coverage.

The counter agent says: “Car insurance is different in [this state]. If you’re from [your state], your policy won’t cover you.”

You say: “My car insurance and rental car insurance can protect me in every state.”

If you’ve purchased the Rental Car Damage Protector from Allianz Global Assistance, rest assured that you are protected in every state. (Texas and New York residents must purchase the Rental Car Damage Protector as a separate plan, however; it can’t be bundled with a travel insurance plan.)

What about liability insurance? In the United States, an individual’s car insurance policy typically covers you even when you cross state lines. If the state you’re visiting has higher minimum insurance requirements than your home state, your insurance policy may temporarily increase to meet those minimums, if necessary.2 Insurance can vary by plan and provider, so check your personal policy before your trip. Please note that liability insurance is not included in Rental Car Damage Protector.

One note: Your regular car insurance may cover you in Canada — check with your insurer to be certain — but will not cover you in Mexico. Mexico does not recognize U.S. auto liability policies.3 Contact your insurance company to ask about a free endorsement that gives you coverage for brief trips just over the border (up to 25 miles into Mexico.) For longer trips, you can purchase a separate Mexican liability insurance policy from an authorized agent.

The counter agent says: “American rental car insurance doesn’t work in Europe. You need to buy a collision damage waiver from us.”

You say: “My plan documents clearly say I have coverage in this country.”

Rental car insurance can get especially tricky (and expensive) in Europe. European rental car companies often require customers to have a collision damage waiver, and they can charge a lot for coverage that isn’t so great.

As Travel+Leisure explains, “a CDW in Europe carries a deductible of around $1,000–$2,000—even if the damage wasn’t your fault. And a CDW doesn’t cover your tires, windows, roof, undercarriage, or interior. Nor does it include theft (also called “loss”) insurance, which costs an extra $5–$12 a day.” Not only that, but companies may try to sell you something called a “super CDW” or “extended CDW,” which is an extra-expensive collision damage waiver that has no deductible.

Don’t get overwhelmed! Allianz Global Assistance:

  • Does cover you overseas (with certain exceptions*)
  • Does cover the entire car
  • Does not charge you a deductible
  • Does protect against theft, as well as damage caused by things like fires, storms or vandalism.

Carry your plan documents with you or get quick access at your fingertips through the Allianz TravelSmart app, so you can show a rental car counter agent what your plan covers.

The counter agent says: “Your collision damage waiver will cover physical damage to the car, but you still need supplemental liability coverage.”

You say: “No thanks. I already have liability coverage with my car insurance policy.”

If you have personal car insurance, then you may already have liability coverage in the United States. This is the kind of insurance that pays for other people’s injuries or property damage in an accident you cause. (Other countries may not recognize U.S. personal auto insurance policies. In Europe, liability insurance is typically included with your car rental rate.)5

Supplemental liability insurance is simply that: a supplemental policy that raises your liability coverage limits — often to $1 million or more. It may also include uninsured/underinsured motorist coverage, which can pay for bodily injury and/or property damage if you’re hit by a driver without sufficient insurance.

When you’re traveling in the United States, if you carry an adequate personal auto insurance policy, you probably don’t need to buy extra liability coverage, the National Association of Insurance Commissioners says.6 Consider this: in the U.S., the average auto liability claim for property damage is $3,683. The average auto liability claim for bodily injury is $16,110.7 Chances are slim that you would ever need $1 million in liability coverage.

Ready to ride? Travel writer Ed Hewitt has some excellent advice for avoiding sales pressure when renting a car. When you step up to the counter, clearly and politely decline unnecessary at-counter upsells before they're offered: “I checked with my insurance company and don’t need any extra coverage; I will fill up the gas tank myself on my way back to the airport, so I don’t need any fuel plan.” It’s as easy as that.

*Coverage is not available in all countries or for all cars. This coverage does not provide liability insurance or comply with any financial responsibility law, or any other law mandating motor vehicle coverage.

NOTE: If you’re traveling to Italy, however, be aware that rental-car companies typically will insist that customers purchase a CDW from them, instead of from a third party.4

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Jun 05, 2018