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By Rick Kahler MS CFP®
Doctors and many other travelers, including me, rarely purchase the insurance offered by the car rental company. The daily charge of $20-$40 is expensive, and the coverage often unnecessarily duplicates that provided by your credit cards and personal auto policy.
No Assumptions!
Before you assume you don’t need the rental insurance, though, it’s wise to take a closer look at where you’ll be traveling and whether your existing coverage will take care of all potential costs. There are times that taking the insurance can alleviate some nasty surprises.
The insurance can be a good idea if you rent a car outside of the US. As I’ve discovered first-hand, being in a country where roads double as paths for livestock, or one where people drive on the “wrong” side of the road, can increase your risk of minor accidents. While in some countries my US policy will cover damage, I don’t enjoy the prospect of spending countless frustrating hours as an intermediary between the foreign rental company and my US insurance carrier. I am happy to pay for the insurance and avoid heated arguments with the rental company over whether any damage was pre-existing, much less the hassle of negotiating repair bills.
It is important, though, to buy insurance carefully. On a recent trip to South Africa I rented a car and purchased the insurance online. When I returned the car, the agent said I had scratched the paint. Not wanting to waste time arguing, I pointed out I had purchased their insurance, thinking that was the end of the discussion. It wasn’t. The insurance offered on the site where I rented the car was a third party policy, not one offered by the car rental company. That meant the car rental company would charge me for the alleged damage. Then it was up to me to slug it out with the third party insurer. This left me taking pictures of the alleged damage, filling out damage reports, and arguing with the rental company agent. By the time I checked in for my flight home, I was tense and stressed: exactly what I intended to avoid by purchasing the insurance.
Beware loss-of-use Charges
Another instance where taking the rental company’s insurance can be beneficial is to avoid loss-of-use charges if you damage a rental vehicle. This is a fee the rental company charges to cover the income it loses while a vehicle is in the repair shop. Companies used to absorb this cost, but in recent years they have begun to charge consumers for it. The catch is that the coverage you have through your regular auto insurance or your credit card may not pay loss-of-use charges.
A few states (Alaska, Connecticut, Louisiana, Minnesota, New York, North Dakota, Rhode Island and Texas) mandate that insurers automatically pay loss-of-use claims. If you don’t live in one of these states, it’s a good idea to verify whether your credit card will cover these fees.
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Visa and MasterCard Card?
According to AutoSlash.com, a website focused on helping consumers save money on car rentals, Visa does cover loss-of-use charges. However, it uses “fleet utilization logs” from the car rental company to verify the claim. Obtaining those records can take time and be a hassle.
MasterCard may cover some loss-of-use charges, but check the restrictions. American Express offers a separate car rental protection policy; the premium is likely to be cheaper than the premium charged by a car rental company.
Assessment
Never buying car rental insurance isn’t necessarily a wiser choice than always buying it. As the consumer, it’s up to you to do enough research to decide whether the insurance is a product you need.
Conclusion
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Filed under: Insurance Matters | Tagged: Auto Rental Insurance, Rick Kahler CFP® |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
International Car Rental Insurance Not Always Trouble-Free
When traveling in the US, I rarely purchase the insurance offered by car rental companies. By paying with a major credit card, you will typically have all the insurance coverage you need and save $20 to $50 a day in unnecessary charges. I do suggest calling the card company in advance to verify your coverage limits.
This doesn’t fully apply when renting a car internationally. I recommend calling your credit card company before every trip to specifically check that they will cover a car in the country you will travel to. Adding additional car insurance coverage to a travel insurance policy is another economical option. It’s okay to have duplicate insurance; just verify that at least one policy will accept being secondary.
Still, even after taking these precautions, things can go awry. They did for me on a family vacation to Ireland this summer.
As usual, I declined all insurance coverage and used my MasterCard World Elite card. I verified with MasterCard that I was covered in Ireland for a vehicle with a manufacturer’s suggested retail price (MSRP) of up to $50,000. The MSRP of the Nissan Rogue I was renting was $26,000 to $34,000, well under that limit. Because I am a worrier, I also purchased a separate $40,000 vehicle policy from my trip insurance company.
When we arrived in Dublin, Rebecca at the Hertz counter asked why I didn’t want their insurance. When I told her my credit card would cover it, she said American credit cards don’t extend to cars in Ireland and she wanted proof. After much hassle, I had my credit card company email proof that the coverage extended to Ireland for $50,000.
She then told me that $50,000 wasn’t enough; I needed $65,000. I argued about this and finally said it didn’t matter because I had an additional $40,000 of primary or secondary coverage with my travel insurance company that would more than cover a problem.
Rebecca wasn’t moved. She told me I would either pay her an additional $584 for their insurance or I would need to go someplace else to rent a car and lose the $424 I had already paid to Hertz. She curtly added, “Good luck, because this weekend is a bank holiday and everyone is sold out.”
All of this took two hours at the end of a long day of travel. I had been up for 24 hours. My wife and two children were also exhausted and hungry. While I knew I had met the terms of the agreement and that I was being extorted, the thought of losing my initial $424, plus going back to the terminal to start a probably futile hunt for a different car, was too much. I agreed to pay the extra $584.
As soon as we got back to the US, I filed a dispute (still pending) with my credit card company on both the initial $424 car rental cost and the $584 insurance charge. My grounds were that Hertz violated their contract, which only required me to accept full financial responsibility or to have verified that I had insurance that would cover a loss. They violated the contact by demanding that I prove having coverage in excess of the value of the car and by refusing to accept that proof when I produced it.
The lesson here?
Faced with a person of questionable ethics and a situation with limited choices, you may be forced to give in to what is essentially extortion. If that happens, document everything, then file appropriate complaints and dispute the charges. And if you ever rent a car in Dublin, steer clear of Rebecca.
Rick Kahler CFP©
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WELLS FARGO and Auto Insurance
U.S. regulators reject Wells Fargo’s plan to repay customers — sources.
http://www.msn.com/en-us/money/companies/exclusive-us-regulators-reject-wells-fargos-plan-to-repay-customers-sources/ar-BBNchkr?li=BBnbfcN
Hank
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