Car Rental Insurance | How to Determine Whether You Need the Extra Insu

Hi there, it’s Ernest from Trip Astute. In this video, we’re discussing the car insurance dilemma, and whether you should opt for extra insurance the next time you rent a car. (light chiming music) Renting a car can be a frustrating process. When you search for prices, they seem very reasonable. But then you add in all the extras, and you’ve often doubled the price of the rental. One of the biggest options that you’re presented with is rental insurance. It’s hard understanding whether you need it or not, and the rental car companies will often try to convince you that it’s critical to have. Also, many of you have travel credit cards which often offer a rental car insurance benefit. So today, we’re going to explore the topic and hopefully give you some things to consider when making a decision on insurance. First off, we need to clarify that not all credit card auto insurance benefits are the same. In order to understand the nuances, we need to discuss the difference between primary and secondary auto insurance. Primary means that it’s the first line of defense when your coverage kicks in. Secondary is to cover anything beyond the primary insurance, which would normally be your normal or regular auto insurance policy. Keep in mind that this only covers the damages to your rental car, so if you were to cause an accident and damage another vehicle, then the credit card company would only cover the damage to the rental car and not to the other vehicle. You would have to pay for the other damage using your personal auto insurance or out of pocket. Since there are so many variations of this scenario, I thought I’d run through a couple just to help illustrate the benefits and risks. In scenario one, you have personal auto insurance and you have a credit card with primary coverage. If you were to hit another vehicle while driving your rental car, then your credit card would cover the damage on the rental car, and your personal auto insurance would cover the damage to the other vehicle, as well as any damage on the rental car that is in excess of the coverage provided by the credit card. In this situation, you probably don’t need any additional insurance coverage and can decline the coverage being sold through the rental car company. In scenario two, you have personal auto insurance and you also have a credit card with secondary coverage. In this situation your personal auto insurance would pay for the damage on your rental car and the vehicle you hit. And anything in excess on the rental car would be paid by your credit card’s coverage. In this scenario, I probably wouldn’t buy the extra coverage, but it might be worth it if you’re worried about your insurance premiums going up due to an accident, or if you feel like your personal auto insurance is insufficient. In scenario three, you don’t have personal auto insurance, but you do have a credit card with primary coverage. If you were to cause an accident, then the damage to your rental car would be covered by your credit card, but you would still be liable for the damage to the other car. In this scenario, I would opt for some kind of additional coverage. In scenario four, you don’t have personal auto insurance, but you have a credit card with secondary coverage. In this situation, your secondary becomes primary since there isn’t another source of coverage. Unlike the previous scenario, the damage to your rental car would be covered, but you would still be liable for the damage to the other vehicle, so I personally would opt for rental insurance coverage. In addition to these scenarios, here are some extra tips to consider. Number one: Consider third-party liability insurance. Rather than buying insurance from the rental car company, you can now purchase liability-only insurance for often cheaper, especially if renting for a longer period of time. This works great for folks that have rental car insurance benefits on their credit card, but want to add the liability insurance just to be safe. Since a lot of people now rely on ride-sharing and public transport, or choose not to own a car, this could be a great option to protect yourself when renting a car. Number two: Use your credit card to book the reservation. If you want to take advantage of your card’s insurance coverage, make sure you book the reservation with that card. Otherwise, the credit card company will likely decline your claim. Number three: Call your credit card company if you’re unsure of your coverage. There are so many nuances and scenarios, so make sure you get all your answers before your trip. If you’re unsure of your coverage or benefits, I suggest calling your credit card company. Also, if you’re not sure whether you have primary or secondary insurance, I’ll include a link below that shows which cards have primary auto insurance coverage. Number four: Consider that your coverage may be different when traveling internationally. If you have personal auto insurance, you may want to double- check whether your insurance has limits or conditions when renting a car abroad. If so, you may want to get temporary third-party auto insurance that guarantees international coverage. Number five: Insure that your personal auto insurance covers rental cars. Most policies cover whatever car you’re driving, including rental cars. But if you’re unsure, contact your insurance company to verify the coverage. Number six: Bring a copy of your insurance card or documentation when traveling. In the event that you do get into an accident, you’ll be glad that you have your documents with you. Also, I’ve had some experiences where the rental car rep wanted to see the details of my coverage or policy, so it’s helpful to have it with you when picking up your rental car. Again, I just want to emphasize that everyone’s situation is different and your appetite for risk may be different than mine. When traveling, I tend to be a bit more conservative, as I prefer to have peace of mind, but your situation might be completely different. Lastly, if you happen to have an ultra premium credit card like the American Express Centurion, then you likely have liability coverage as well. I definitely don’t have one and I probably would never qualify for one either, but I thought I’d let you know in case you happen to have one of these exclusive cards. And that’s our travel tip on rental car insurance. Do you have any experience with rental cars or the coverage provided by credit cards? If so, please share them in the comment section below. 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