Assess Your Coverage Needs Before Arriving at the Rental Counter
INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; media@iii.org
NEW YORK, May 27, 2010 — The
AAA estimates that 87 percent of all Americans who are going away this Memorial Day weekend will reach their final destination by automobile—about 28 million people. But those renting a car for their first summer road trip often don’t start thinking about rental car insurance until they get to the counter, which can result in costly mistakes, according to the
Insurance Information Institute (I.I.I.).
“Faced with a number of choices, some renters either purchase all of the coverage or they decline the insurance without knowing if they are covered by other policies. This can result in either wasting money by purchasing unnecessary coverage or having gaps in coverage, making the driver dangerously uninsured,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “Whether or not to buy rental car insurance or any other insurance product should not be a snap decision.”
Many car rental companies now impose various fees after an accident that you may not be aware of and will be held responsible for. These fees can include: towing, storage, impound fees, loss of use, diminished value and administrative services.
“Administrative and diminished value fees vary widely, costing anywhere from several hundred to several thousand dollars if you are involved in an auto accident,” noted Salvatore.
Before renting a car, the I.I.I. suggests that you make two phone calls: one to your insurance agent or company representative and another to the credit card company you will be using to pay for the rental car.
Rental car insurance offers four important coverages:
- Loss Damage Waiver (LDW), also referred to as collision damage waivers and is not technically an insurance product—it relieves or “waives” renters of financial responsibility if a rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car cannot be used because it is being repaired. It may also cover towing and administrative fees. Loss damage waivers cost between $9 and $19 a day.
- Liability Protection provides financial protection from lawsuits in the event you are sued following an accident involving a rental car. While by law, rental companies must provide the state required amount of liability insurance, generally, these amounts are low and do not provide much protection. Furthermore, the company has the right to recoup any monies it pays out from the renter. You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car. If you decide you want the supplemental insurance, it will cost between $7 and $14 a day.
- Personal Accident Insurance will cover you and your passengers for medical and ambulance bills incurred by injuries in a car crash. If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day.
- Personal Effects Coverage provides insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. Personal effects coverage generally costs between $1 and $4 a day.
The I.I.I. has a podcast available that outlines the coverages offered in most rental car policies. Knowing more about these coverages can consumers make smart choices and save money when renting a car.
THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.