June 01, 2003
Meetings & Conventions: Planner's Portfolio June 2003 Current Issue

On Travel

By Bruce Myint


Personal auto insurance and credit cards offer protection for rental-car drivers

Would you like insurance with that? Today’s travelers often find themselves befuddled by the coverage options offered by car rental agencies. Those options, in the form of damage waivers, liability supplements and personal accident insurance, often are costly and sometimes unnecessary, since many customers already are covered by their auto insurance or credit card companies.

But you won’t hear that from the rental agent.

“You can’t expect the rental-car company to know what coverage a customer already has,” says Richard Broome, vice president of corporate affairs at Park Ridge, N.J.-based Hertz. “And customers aren’t going to bring a copy of their auto insurance policies.”

To avoid any doubt at the rental car counter, says Broome, customers need to find out what kind of coverage they already have before leaving for their trip.

Auto-policy holders retain their normal coverage when driving a rental car, according to a spokesperson with Bloomington, Ill.-based State Farm Insurance, the country’s largest automobile and home insurer.

Coverage can differ widely from one person to the next, however. For example, those who lack collision or comprehensive coverage won’t have it on the rental. State Farm only covers its U.S.-based drivers at home, in Canada and in U.S.-owned territories; so buy the rental insurance when you go overseas.

Ask your insurance rep if it is necessary to purchase coverage from a rental agency. If so, agencies in most states offer loss damage waivers (LDW) or collision damage waivers (CDW). For around $20 a day, these shield customers from charges in case the car is damaged or stolen.

Some credit card companies also offer rental car protection. However, restrictions abound, particularly for business travelers.

While American Express’ personal and small-business cards automatically offer free coverage, corporate cards do not, according to a spokesperson.

American Express covers sport utility vehicles, but not trucks or vans. And travelers in countries such as Australia, Ireland, Italy, Israel, Jamaica and New Zealand are exempt from rental benefits.

Finally, American Express’ coverage only is available if the cardholder declines the agency’s damage waivers and uses the card to pay for the the total bill of the rental.

Just as with personal auto insurance, coverage can vary dramatically, so it is worth contacting your credit card company representative to find out what is offered.

It is also useful to ask if the coverage is primary or secondary. Some credit card companies only will pay for repairs that exceed those covered by the cardholder’s auto insurance. In case of an accident, this could increase your car insurance premiums.

The bottom line: If a renter lacks applicable auto insurance or credit card coverage, experts suggest purchasing a damage waiver, since the daily charges are cheaper than the cost of replacing a crashed car.

To protect drivers in case of serious accidents, some rental agencies offer liability insurance supplements (LIS) or personal accident insurance (PAI).

An LIS plan covers drivers in case they hit or injure a third party. At Hertz, the amount normally comes to $1,000,000 per accident for a fee of around $11 per day.

PAI provides benefits to the driver in case of injuries or death, similar to health insurance. Typically, PAI costs around $5 per day. Many auto insurance policies cover liability and personal medical claims. The lesson, once again, is to research pre-existing coverage before walking up to the rental counter.

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