Do I Need Rental Car Insurance?

Renting a car can be a daunting experience. From deciding whether you need rental car insurance to understanding the various possible surcharges, there are lots of things to keep in mind at the rental car counter. To help demystify the process, here are six things to consider next time you rent a car.

1. Age Matters.

Most people have heard the “rule” that you can’t rent a car until you’re 25 — but that’s not really true anymore. For those under 25, car rental is often an option. Nowadays, 21- to 24-year-olds can rent from most car rental services and drivers between the ages of 18 and 21 can often find smaller agencies that will rent to them.

If you are on official military business or military personnel, many companies will rent to you as long as you are 18. And if you live in Michigan or New York, car rental companies are legally required to rent to anyone 18 years old and older.

However, in general if you are younger than 25, you can expect to incur a sizeable surcharge when you rent a car. This is mainly because drivers under the age of 25 have a much higher rate of car accidents and fatalities, particularly male drivers.

2. Know What Rental Car Insurance Coverage You Need Before You Get to the Counter.

When you pick up your rental car, you can count on the representative trying to convince you that you need their car rental insurance. Usually it’s referred to as “collision damage waiver” (CDW) insurance.

However, purchasing CDW insurance through the car rental company can nearly double the cost of your rental, so it’s a good idea to do your research before you rent. In particular, you should explore coverage you may already have through your personal auto insurance and your credit card.

• Personal Auto Insurance Coverage. The coverage that you have for your own car generally applies to rental cars, as long as you aren’t using the car for business or traveling outside of the United States. Check your insurance policy online or call your auto insurance company to confirm coverage before you rent. Keep in mind that claims to your auto insurance are often subject to your deductible and could also cause your premiums to increase.
• Credit Card Coverage. Most major credit cards offer some form of coverage for rental car damage. But coverage is varied and there are usually exclusions (like damage to other vehicles or personal injury). In most instances credit cards come with CDW insurance, which is secondary coverage that applies to anything not covered by your personal auto insurance.
  A few credit cards come with primary rental car insurance coverage. Primary coverage covers the full loss of the rental vehicle through damage or theft and can help you keep your auto insurance premiums down if you do get into an accident. Check with your credit card company to see what they cover. And remember that if you do decide to rely on credit card coverage, you will need to make sure you pay for your rental with that credit card!

3. Use Your AAA or Other Club Membership.

Many membership organizations such as AAA offer discounts for rental car companies, so don’t forget to check before you rent. In addition, if you need to have your rental car towed or need to fix a flat tire, your AAA or other auto club membership is likely much less expensive than the same service through a rental car company.

4. Don’t Prepay for Gasoline.

Paying the rental car company to refill your tank for you is always going to cost more than refilling yourself. So unless you have an especially unique circumstance, top off your own gas tank.

5. Go Through the Contract With the Agent.

Ask the agent to walk you through the contract to explain any confusing contract language and any additional fees.

6. Inspect the Car Thoroughly.

Be sure to thoroughly inspect the car before and after you rent. Before you take off in the car, slowly walk around and take date-stamped pictures or video of the car’s exterior. Also make sure everything inside the car, such as power windows and seats, works correctly. Document any damages — no matter how minor you think they are. Follow the same procedure when you drop the car off, especially if no agent is present.