When do you need to buy car rental insurance?

With summer drawing to a close and Labor Day weekend around the corner, drivers may be trying to squeeze in a last-minute road trip. If you’re planning to rent a car, be aware of what rental insurance and your credit card cover, and more importantly, what they don't.

To buy or not to buy the insurance
It’s happened to nearly everyone. You’re tired from your flight, you’ve waited in line at the rental car center and when it’s your turn at the counter, you have no idea whether you should buy the protection the agent is trying to sell.

“If you have personal car insurance already, you really don’t need to buy the coverage at the counter. If you don’t own a car, and you don’t have insurance, you can buy collision / loss damage coverage for about $15 a day,” says Brian Karimzad, director of MileCards.com.

Most major credit cards also provide collision coverage when the card is used for the rental. Karimzad says it’s important to note that credit card protection does not include liability insurance, which protects against being sued in the event another person is harmed or property is damaged.

Liability coverage can be purchased through the rental company for an average of $12 a day. Frequent car renters who don’t already have auto insurance can buy a non-owner policy for $200-$300 a year to provide both collision and liability coverage.

SUV upgrades
Sure, you’d love to roll up to the lakefront cabin in that Chevy Tahoe, but think twice before taking that upgrade if you’re relying on collision coverage through your credit card to cover your rental. Many card issuers won’t honor claims on SUVs.

Luxury cars
Similar to the SUV exception, your credit card won’t cover that gorgeous Ferrari or Mercedes in the rental lot either.  Many credit cards won’t cover vehicles worth more than $50,000.

Flat tires
Probably the most common issue car renters encounter is a flat tire. In most cases, your credit card or personal auto insurance may cover it, but there could be a deductible as high as $100-$200 if that happens.

Karimzad says most rental companies used to cover flats, but have been adding fees to cover these extras. 

“Some of those rental car companies try to offer you roadside assistance. It’s like $3, $5 a day. Your credit card usually has some roadside assistance included,” Karimzad says. "You still have to pay for the tire, but at least you don’t have to pay for the guy to come change it for you.”

Foreign rentals

If you’re planning to explore a foreign country by rental car, drivers are required to buy insurance through the rental company if they’re in Italy, Australia, New Zealand or Costa Rica – and that’s regardless if you have a personal car insurance policy or your credit card offers coverage.

If you’re traveling in any other country and your credit card covers you (some credit card policies will exclude covering you in certain countries), you don’t have to buy collision coverage from the rental company, as much they will try to sell it to you, Karimzad says.

He suggests contacting your credit card company before renting to find out their policies for individual countries. They can provide a letter explaining you’re covered in that country, which should make the transaction smoother at the rental car counter.  

To check the benefits offered by your specific card, check out the links below:

American Express