NEW YORK, August 28, 2013 — An estimated 34.1 million Americans are expected to travel at least 50 miles from home this Labor Day weekend, the highest turn out since 2008, when the recession was at its peak, the American Automobile Association reports. Gas prices are also down, nearly 5 percent, another plus for vacationers. However, for those renting a car, it can be confusing, frustrating and downright daunting. Unfortunately, many consumers do not even think about car rental insurance until they get to the counter, which can result in either wasting money by purchasing unnecessary coverage or having dangerous gaps in coverage, according to the Insurance Information Institute (I.I.I.).
If you have dropped either comprehensive or collision on your own car as a way to reduce costs, you will not be covered if your rental car is stolen or damaged in an accident.
Check to see whether your insurance company pays for administrative fees, loss of use or towing charges. Some companies may provide an insurance rider to cover some of these costs, which would make it less expensive than purchasing coverage through the rental car company. Keep in mind, however, that in most states diminished value (the reduction in a vehicle's market value occurring after a vehicle is damaged and then repaired), is not covered by insurers.
Credit cards usually cover only damage to or loss of the rented vehicle, not for other cars, personal belongings or the property of others. You may not have personal liability coverage for bodily injury or death claims. Some credit card companies will provide coverage for towing, but many may not provide for diminished value or administrative fees. Some credit card companies have changed their policies, too, so you may not have as much coverage as you thought.
To know exactly what type of insurance you have, call the toll-free number on the back of the card you will be using to rent the car. If you are depending on a credit card for insurance protection, ask the credit card company or bank to send you its coverage information in writing. In most cases, credit card benefits are secondary to either your personal insurance protection or the insurance offered by the rental car company.
If you have more than one credit card, consider calling each one to see which offers the best insurance protection.
Waivers, however, may become void if the accident was caused by speeding, driving on unpaved roads or driving while intoxicated. If you already have comprehensive and collision coverage on your own car, check with your personal auto insurer to make sure you are not duplicating coverage you already have. Should you decide it is necessary, this coverage generally costs between $9 and $19 a day.
An umbrella liability policy, however, may be more costeffective. Umbrella liability insurance is so named because it acts like an umbrella, sitting on top of your auto and homeowners (or renters) liability policies to provide extra protection, including accidents, while driving your own car or one that you rent. These policies, usually sold in increments of a million dollars, cost as little as $200 to $300 annually for a million dollars worth of coverage and another $50 to $100 for each additional million.
Those who do not own their own car and are frequent car renters, can also consider purchasing a non-owner liability policy. This not only provides liability protection when you rent a car, but also when you borrow someone else’s car.
If you frequently travel with expensive items such as jewelry, cameras, musical equipment or sports equipment, it may be more cost effective to purchase a personal articles floater under your homeowners or renters insurance policy. With such a floater, your valuable items are protected at home as well as while traveling anywhere in the world and the coverage is broader.
Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org