Car Rentals 2013: Something New, Mostly Old

As always, the biggest hassle travelers face in renting cars is whether or not to buy the rental company's grossly overpriced "collision/loss damage waiver," or CDW. When you rent a car, the base rate does not cover you for collision damage—physical damage to the car you've rented—so you absolutely need a way to protect yourself against that substantial financial risk. Over the years, a "standard model" of rental-car insurance has evolved, with these basic rules:

  • The rental companies are happy—eager, in fact—to sell you CDW, through which they waive their right to collect anything from you in case the car is damaged while in your possession. Although their fine print carefully explains CDW is not "insurance," rental agents typically call it "insurance" when they casually ask you, "You want the insurance, don't you?" The idea of CDW sounds great: You can walk away from your car, no matter what happened to it—with a few troublesome exceptions. The catch, through, is a big one: CDW prices are outrageous, these days running from a low of around $15 a day to close to $30 a day, depending on the company, the car model, and where you rent.
  • For many of you, the insurance you carry for collision damage to your own car also covers cars you rent, at least within the United States. You can therefore rely on this coverage when you rent, but with some caveats: The rental companies pile up lots of charges on top of the actual repair cost, including a "loss of use" fee, an "administrative" fee, and a fee to cover the reduced resale value of the car because it was involved in an accident. And some regular insurance balks at paying these extras. Also, many travelers are worried that an inflated damage cost will go against their claim record, and that even when their insurance pays the claim, they'll pay more than that over future years in increased rates. And regular insurance doesn't cover you at all overseas.
  • Sensing a big opportunity several decades ago, many big credit card companies began offering"free" collision coverage when you used their cards to rent cars. Most such coverage is secondary, however, meaning that the card covers only what the rental company can't first collect from your regular insurance. Very few credit cards offer primary insurance—Diners Club and some premium MasterCard and Visa cards—and you can convert American Express to primary for a charge of $24.95 per rental, up to 45 days.
  • New this year, at least to me, is a different option: Third-party collision coverage from Protect Your Bubble provides up to $35,000 in primary collision coverage for $7.99 a day. According to Protect Your Bubble, coverage includes all the fees a rental company might throw at you, within the $35,000 limit. Protect Your Bubble also sells what appears to be competitively priced travel insurance that includes interruption, cancellation, medical, baggage, and delays. Third-party insurance has been available for years as an option to a bundled travel-insurance policy, but this is the first I've seen where you can buy just the rental-car insurance.

You also need protection against liability claims if you injure someone else or someone else's property. Base rental rates in the United States provide woefully inadequate coverage, unless you rent through AARP, but your regular liability insurance probably covers you.

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Other "insurance" the rental companies sell may be overpriced even more than CDW. Yes, they sell accident, personal-property, and supplemental-liability insurance, but those policies are largely secondary and duplicate coverage you already have.

Regardless of how you decide to protect yourself against claims for collision damage to a rental, I strongly recommend that you take pictures of a car when you first take possession and again when you return it. These days, just about everybody has a smartphone with a good-enough camera. Those pictures can be invaluable when a rental company tries to fob off a previous renter's damage on you because the previous driver bought CDW and you didn't.

Ed Perkins on Travel is copyright (c) 2012 Tribune Media Services, Inc.

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