If you travel frequently, then one of your major considerations apart from travel insurance will be rental car insurance. And chances are that you don’t want to take out a rental car insurance policy each time you travel. In fact, you may think it a waste of money to buy car insurance at all when you’re travelling.
So, you are standing at the airport counter waiting for your rental car and the agent asks you whether you want rental car insurance, for the 50th time that year, since you travel often. And for the 50th time, you decide that you don’t need it. Rental insurance can run into extras of $20 to $30 a day if you purchase from rental companies and most people that you know would never buy it. Most people think that their regular auto insurance covers their rental cars as well.
Or maybe, you do decide to buy rental insurance, in which case you probably have been spending a small personal fortune on car insurance each year during your frequent trips either in Australia or overseas.
Taking the two scenarios into consideration, the question arises: do you need to buy car insurance and is getting frequent traveller car insurance a good idea? It really depends on several things, including the duration of your trip and the other types of rental insurance available to you.
The Reality of Rental Car Insurance Costs
First, let’s take a look at what kind of expenses you’re looking at if you buy rental insurance from the car rental company each time you travel. Depending on the car company and the car you hire, you may be paying daily extras of $20 to $40 to the company in damage los waiver. For a week’s use this can come up to more than $200. This insurance will help you lower excesses, but is only affordable if your trip lasts only 1 or 2 days.
Even so, if you are a frequent flyer who makes many such trips in a year, this may not be the best option for you to save money while keeping you covered.
However, if you don’t buy this cover and are involved in an accident while travelling and damage the rental car, you could find yourself paying anywhere between $2000 and $4000 in excess, straight out of your pocket. Buying insurance will give you peace of mind, so it helps to have some kind of rental car insurance.
So what are the other options for frequent travellers to get rental car insurance?
- Using Auto Insurance for Rental Car Cover
Alternately, if you use your auto insurance, renters or home insurance for car rental coverage, you should know that the coverage will be limited. Most personal auto insurance policies that include comprehensive and collision coverage will cover rental cars within the limits of the cover. They may not include the rental car company’s ‘loss of use’. This is the loss of rental fees for the car company while the car is getting repaired.
If you’re travelling overseas, you should find out the insurance limits for your destination. Are you covered for liability for injury to others (property and personal) while in a rental car? What are the deductibles in case of accidents in which you’re at fault? Find out the answers to all these questions.
You may also be marked as a high risk driver by your auto insurance company, if you claim for an accident you cause with a rental car. This can raise your auto insurance premiums back home.
- Using Credit Cards for Rental Insurance
You can also use some of the policies offered by credit card companies to their customers. These companies will offer rental car damage excess waivers if you charge the rental costs on your card. These waivers are significant and are part of annual policies that give you peace of mind, especially if you are a frequent traveller.
ANZ, for instance, will charge you $24 a year and a $350 excess contribution and pay any remaining damages up to $2050 in case of an accident. Even if you travel only a few times a year, this can be a beneficial policy, as long as the costs of the damage repairs for the car you are using are below $2400. Any extra costs over and above the $2400, you have to pay out of pocket. Platinum card holders get free cover.
The Earth Platinum Amex card also offers inbuilt excess covers of up to $6500.
Many people believe that a combination of their auto insurance and credit card insurance policies have them covered as far as rental cars in concerned. However, that may or may not be the case, depending on certain circumstances.
You may find that the cover your credit card provides is only ‘secondary’ insurance, which you can use only after your auto insurance has been exhausted. Credit card companies usually have a million rules that you have to follow in order to avoid getting swamped with additional costs that you least expected.
Read credit card documents carefully – benefits offered vary across companies and types of cards. Most card companies that offer car insurance offer the basic damage, collision and theft covers. But they may not include personal liability (damaging property, hitting a pedestrian, injuring the drivers in a third-party car).
The ANZ Rental Cover Terms and Conditions, for instance, mention as a final condition that your platinum card will not cover you if you claim responsibility or liability for another party in a collision in which you are involved.
Buying Primary Coverage for Frequent Travellers
Another option is for you to buy third-party primary coverage, which will keep your insurance company out of it (cutting off any chances of your premium going up). These offer low daily rental rates and also have low or no deductibles, like the American Express Premium Car Rental protection. However, these do not cover liability.
Buying Liability Protection
In order to protect yourself from injuries and property damage to a third party with your rental car, you need liability protection. If you are a high net worth individual, you may already have an umbrella liability policy. These policies can provide additional covers over and above car rental insurance. If you don’t have one, consider buying a Supplemental Liability Protection from an insurance agent – these are quite reasonably priced.
In Conclusion
If you are a frequent traveller, it is wise to buy some kind of annual rental car cover and keep your auto insurance company out of it. Use your credit card company or a third party for your primary rental car insurance and add an umbrella cover for liability, making sure to shop around for the best rates. These should have you fully prepared for any kind of rental car accidents you face domestically or overseas.
William Smith is an insurance expert from Alice Springs, Australia
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