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What Does Rental Car Insurance Cover?

What Does Rental Car Insurance Cover?
Allianz - What Does Rental Car Insurance Cover?

Rental car insurance can be really, really confusing. We recently read the story of one bewildered traveler who rented a car in Brussels and received an $810 bill for scratching a bumper. That’s because the rental car agency pushed them into buying extra insurance (with a 600-euro deductible), which invalidated the insurance they already had! That’s just not fair.

That’s why Allianz Global Assistance offers the Rental Car Damage Protector. It’s a straightforward, simple rental car collision damage waiver that costs just $9 per day and covers your rental car almost anywhere in the world. What exactly does this type of rental car insurance cover?

What does the rental car collision damage waiver cover?

A collision damage waiver, or CDW, can actually cover more than collision damage to the rental car. As we define it, it covers costs up to $40,000 if a car you're renting is stolen or is damaged in a covered accident or while it's left unattended.

What are those costs, exactly? The Rental Car Damage Protector pays for the cost to repair or replace the car (whichever is less), plus reasonable loss of use fees the owner of the rental car incurs while it’s being repaired. Loss of use means the money the rental car company is losing while the car is in the shop. We consider replacement cost to be the actual cash value of the rental car, minus its reasonable salvage value.

It’s important to note that the Rental Car Damage Protector gives you primary coverage. Primary coverage means the policy is the first to pay the costs for damage or loss — not your own car insurance. You pay no deductible (as you likely would for a collision claim involving your own car). The collision damage protection you may get through your credit card company is typically secondary protection, meaning it kicks in after your regular car insurance.

Few people know that the Rental Car Damage Protector also includes two unexpected bonuses. One is the trip interruption benefit up to $500, which can reimburse you for the unused, non-refundable portion of your trip and for the increased transportation costs it takes for you to return home due to a covered reason. So, for instance, if you have to cut your trip short because your daughter falls seriously ill, this benefit can reimburse you for nonrefundable rental car costs, hotel reservations or plane tickets, among other expenses.

The second is free access to our emergency assistance hotline. Wherever you are in the world, you can call the hotline for help with things such as: finding qualified medical care, replacing a lost or stolen passport, making new travel arrangements, finding legal assistance or obtaining an emergency cash transfer.

Why is it important to buy a collision damage waiver?

Because almost nothing will wreck your vacation faster than a massive, unexpected bill from the rental car company.

A collision damage waiver is invaluable when your rental car actually gets damaged in a crash — or worse, when you walk out of your hotel and find your rental car has been stolen. (You might be surprised by the countries with the highest rates of auto theft: Uruguay, New Zealand, the Bahamas and Italy.1) Whether or not you were at fault, the waiver can pay those steep repair or replacement costs.

It’s just as valuable when you don’t damage the car, but the rental car company claims you did. Incidents of a rental car company charging for damage that a customer says they didn’t actually cause are common, unfortunately. If you drop off your car when the office is closed, and an employee doesn’t examine it until later, you could be held responsible for damage you didn’t cause. Another common scenario: the rental car agent fails to write down pre-existing damage. “That can be a particular problem with many airport rentals, which are inspected and then left for customers to pick up later unescorted,” notes Consumer Reports.2 To protect yourself, take tons of photos when you pick up the car and when you drop it off.

What does the rental car collision damage waiver not cover?

  • Bodily injury liability: This is the big one. The Rental Car Damage Protector is not rental car liability insurance. This waiver protects only the car — not you, your passengers or other people you may injure in a crash. If you’re renting a car in the United States, your regular car insurance may cover you for bodily injury liability, which pays for injuries suffered by other people in an accident for which you’re held responsible.

In Europe, car rental rates typically include liability insurance. In other countries, policies vary — contact the local embassy ahead of time to find out what kind of rental car insurance you might need.

  • Your emergency medical care: The Rental Car Damage Protector does not cover any type of emergency medical care. If you’re driving in the United States, your regular auto insurance and health insurance may pay for treatment you receive as a result of injuries in a car accident.

Overseas, you should consider protecting yourself with a travel insurance plan that includes emergency medical benefits and emergency medical transportation benefits. According to the Centers for Disease Control, “nearly half of medical evacuations back to the United States are the result of a car crash, and a medical evacuation can cost upward of $100,000.”3

  • Damage to other people’s property: If you rear-end a camioneta (aka a chicken bus) in Guatemala, the Rental Car Damage Protector can pay to repair damage to your rental car — but it won’t pay to redo the bus’s lavish paint job. You’ll have to pay for that out of pocket, unless you’ve purchased additional rental car insurance that includes property damage liability.
  • Drunk driving: If you damage your rental car while driving under the influence of alcohol or a controlled substance, your losses will not be covered.
  • Certain vehicles: The Rental Car Damage Protector does not cover trucks, campers, off-road vehicles, trailers, motorbikes, recreational vehicles, antique vehicles or any vehicle with an original manufacturer’s suggested retail price greater than $40,000.
  • Renting a car in certain countries: The Rental Car Damage Protector does not cover cars rented in or driven through Israel; Jamaica; the Republic of Ireland; Northern Ireland; or jurisdictions where the law doesn’t allow this coverage.
  • Long-term rentals: Any rental or lease exceeding 45 consecutive days is excluded.

Other exclusions and requirements apply; please be sure to read the plan documents so you understand all the terms and conditions. Contact Allianz Global Assistance anytime with questions about the Rental Car Damage Protector or other travel insurance products.

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May 10, 2018