Insurance Law ➲ Rental Cars

The Truth about Rent Car Insurance You Need to Know!

To better understand consumer experiences with Rental Car Insurance, we have searched for expert US travel industry advice to provide some context.

This blog article by industry expert Ed Perkins titled "The Truth about Rental Car Insurance You Need to Know" is dated 20 September 2023 and appears "on point".

"Consumer advocate Ed Perkins, the founding editor of the Consumer Reports Travel Letter, has been writing about travel for more than three decades."

The introduction to the blog article is extracted below:

"No matter how often I cover the problems that come with collision damage under car rental insurance, consumers continue to share their frustrations.

A reader recently emailed me:

'I'm interested in finding a complete bumper-to-bumper, 'drop off the keys at the counter' car rental coverage when I travel. I recently thought I had complete coverage though a credit card, but when my car suffered a small dent, the car rental company flat-out refused to document that it actually lost income from having the car rental in the shop (which took three weeks to repair a small dent). I was left with responsibility.'

This experience is uncommon, but not unique.

Car rental companies desperately want you to buy their collision damage waiver, or CDW (sometimes also known as loss damage waiver, or LDW), and will go to great lengths to make you pay for even the smallest damages if you don't.

Here's what you need to know before you shell out for car rental insurance on your next vacation ..."

The detailed "What you need to know" part of the article includes the following headings:

The 1-way to drop your keys and forget it!

CDW Insurance is ridiculously overpriced

You'll pay up-front for all damage

Damage is more than fixing a dent

You need General Liability Protection

Alternatives to Rental Company Collision Damage Waivers

1️⃣ Pay with your Existing Car Insurance;

2️⃣ Use Credit Card Benefits;

3️⃣ Third-Party Car Rental Insurance;

The Uncertainty Principle

key takeaway

"The takeaway from all this: No alternative source of collision damage coverage-your auto insurance, your credit card, or a third party-completely isolates you from risk. Lots of travelers successfully rely on lower-cost alternatives to CDW without encountering any problems, sure.

Occasionally, however, your own insurance, credit card, or third-party policy may not cover an unusual charge a rental company might impose.

If you're unwilling to accept any risk at all, you might want to buy that overpriced CDW. For most travelers and circumstances, credit card or third-party coverage is sufficient, and primary coverage is a lot better than secondary."

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Do you need an International Driving Permit (IDP)?

Some car Rental Car Companies might ask for an International Driving Permit (IDP) as a part of their standard policy, even if having it is not necessary for that country.

Other countries, such as Botswana or Saudi Arabia, require an IDP when hiring a rental car.

Always double-check with your car rental company’s terms and conditions before you rent a car to avoid unpleasant surprises during your trip.

You can only obtain an International Driving Permit in the country where your driver’s license was issued.

That’s why it’s crucial to get the permits before you leave for your trip, otherwise it may become impossible to rent a car (or drive at all) overseas.

Please refer to our FAQ for more information to help you make this determination.

At a later date, if there is sufficient demand, we may decide to build a dedicated International Driving Permit ➲ Legal Wizard.

An International Driving Permit (IDP), often referred to as an international driving license, is a translation of a domestic driving license that allows the holder to drive a private motor vehicle in any country or jurisdiction that recognises the document.

International Driving Permits are governed by three international conventions: the 1926 Paris International Convention relative to Motor Traffic, the 1949 Geneva Convention on Road Traffic, and the 1968 Vienna Convention on Road Traffic. When a state is contracted to more than one convention, the newest one terminates and replaces previous ones.

IDPs are issued by a national government directly, or through a network of AIT/FIA organizations or by any association duly empowered thereto by such other Contracting Party.^[1]

For the latter case those issuing organizations are mostly automobile associations,^[2] such as American Automobile Association^[3] in the United States, Norwegian Automobile Federation^[4] in Norway and Riksförbundet M Sverige^[5] in Sweden. As there are many unofficial sellers on the internet, the AIT/FIA has created an approved directory to all IDP issuing organizations in the world.^[6]

To be valid, the IDP must be accompanied by a valid Driver's license issued in the applicant's country of residence.

An IDP is not required if the driver's domestic licence meets the requirements of the 1949 or 1968 convention; the domestic licence can be used directly in a foreign jurisdiction that is a party to that convention.^[7]

In addition, other arrangements eliminates the need of an IDP in some countries, such as the European driving licence valid within the European Economic Area (EEA) as well as member states of the Association of Southeast Asian Nations (ASEAN) with each other.^[8]

A major tourist destination that doesn’t recognize the International Driving Permit is the People’s Republic of China. In order to drive in China, foreign tourists need to obtain a Chinese driving license. Contact your local Chinese embassy for details.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Canstar Research reviewed Australian Credit Cards listed on our database, and found that there are a number of companies that do offer complimentary rental car excess cover with their cards.

Bear in mind that some of these providers offer complimentary rental vehicle excess cover for overseas travel only.

It’s also important to remember that there are eligibility criteria that have to be met for this cover to kick in, which could include things such as charging all or part of travel costs to the card.

Before committing to any particular credit card, check upfront with your provider and read the Target Market Determination (TMD), Key Facts Sheet and other important policy documents so you understand details about any relevant car excess cover.

• American Express
• ANZ
• Bank of Melbourne (Overseas Only)
• BankSA (Overseas Only)
• Bendigo Bank
• Beyond Bank
• BOQ
• Commonwealth Bank (Overseas Only)
• Great Southern Bank (Overseas Only)
• Heritage Bank
• HSBC
• ING (Overseas Only)
• NAB
• Qudos Bank (Overseas Only)
• St.George Bank (Overseas Only)
• Suncorp Bank
• Westpac

Source: www.canstar.com.au – 23/11/2023.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What level of General Liability Protection do you have (if any)?

Regardless of whether or not you decide to take up Rental Car Insurance, it is important to consider General Liability Protection, specifically, what amount you are covered for based on all relevant insurance policies.

General Liability Protection insurance typically covers damages to other people's property (e.g. their cars) as well as medical costs for other people’s injuries in an accident you're legally responsible for.

In the U.S., every state requires a minimum amount of liability insurance on car insurance policies, so you may already have liability coverage through your personal auto insurance.

Making a fully-informed decision regarding your General Liability Protection insurance coverage:

⚖️ You need to decide whether or not separate General Liability Protection insurance coverage is required to obtain or increase your general liability coverage (if any, especially if it is only the statutory minimum) or whether using a Supplementary Liability Insurance policy is needed to match your risk profile.

Tip: If you run a business or charity or are a high net-worth individual, an "Umbrella" insurance policy providing General Liability Protection for at least $1 Million is always recommended.

Note: As General Liability Protection can be found in a wide range of insurance policies, you should always conduct your independent review of ALL of your existing insurance policies, especially the insurance coverage already provided by your "umbrella" (if any) or general business or charity insurance, as well as your household and/or homeowner/tenant insurance policies.

Given the extensive number of potential sources of General Liability Protection, we have decided to direct you to discuss your General Liability Protection insurance coverage needs with your insurance broker.

At a later date, if there is sufficient demand, we may decide to build a dedicated General Liability Protection ➲ Legal Wizard.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

ALL Damages in the United States are more than just the cost of repairs to the rental car and generally include "Associated Losses" such as the following:

⚖️ "Loss of earnings" means the lost opportunity to rent the car at the full daily rental rate whilst it is out of service being fixed, even if the Rental Car Provider has lots of other cars available for rent.

⚖️ Towing charges if you are unable to drive the car back to the rental returns area, plus a surcharge if the damaged rental car needs to be towed to somewhere other than where it was due to be returned, that is, a different rental car returns location.

⚖️ "Diminished value" or the potential loss of the car's resale value (because of your damage) when the Rental Car Provider disposes of it, usually within 2 years.

⚖️ Claim Administrative expenses associated with the claims process.

Regardless of what other insurance coverage you already have or can access as an alternative, in the United States, taking up a ridiculously overpriced Rental Car Insurance is the only way to achieve "no up-front payments" whilst at the same time avoiding the risk of not being fully reimbursed.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Do you already have (or have access to) Rental Car Insurance?

You may already have (or have access to) existing Rental Car Insurance coverage that meets your needs by providing sufficient coverage for your risk profile.

Start by considering the following possible alternatives:

✅ In the United States, private car insurance coverage might extend to cover rentals as well, but if a claim is made for rental car damages, your annual car insurance premiums will likely increase, you will most likely need to pay a deductible/excess, and you need to be careful about what is and what is and is not covered.

For example, your private car insurance coverage will most likely not extend to cover a rental car that is rented for business purposes.

There are large variations in what your private car insurance covers when you rent a car.  

✅ Travel insurance might indirectly cover rental car damage (or maybe not as certain rental vehicles are generally excluded from coverage such as motorcycles, vans & campers) and if you are travelling overseas it is recommended especially for medical expenses in the event of a collision or otherwise.

Travel Insurance is still recommended for Australians visiting a country that has a Reciprocal Health Care Agreement (RHCA) to provide financial assistance with "medically necessary" care (which incl. emergency care and care for an illness or injury that can't wait until you return home) for Australians visiting the following 11 countries: Belgium, Finland, Italy, Malta, the Netherlands, New Zealand, Norway, the Republic of Ireland, Slovenia, Sweden & the United Kingdom.

✅ Insurance coverage might automatically apply if you decide to pay the rental fees using your credit or debit card, but care needs to be taken to understand what countries are covered if you are OK with secondary coverage (as this is the norm for this type of insurance), and what is and is not covered;

✅ Expedia or Priceline and many other online booking platforms may include an option to buy collision coverage for circa $11 a day (the coverage is generally provided by a third-party insurance company such as Allianz or AXA); or

✅ Third-party collision coverage such as Bonzah which costs around $10-$20 a day is yet another option to consider, though this is something that most likely requires planning before you pick up your rental car.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.