Do You Need Supplemental Coverage and Waivers Pushed by Car Rental Companies?

Don't automatically assume that your current policies and credit cards will completely protect you

Supplemental Rental Car Insurance and Optional Damage Waivers Can Cost a Lot But May Protect You From Loss
Image: NCCC
November 8, 2018

When you rent a car, you have a lot of decisions about supplemental insurance, damage waivers, loss waivers and more. But should you get them? For most people, it isn't worth the money. Insurance policies cover most damage done to the rental. But as more rental car companies are charging fees for minor blemishes, loss of use, and depreciation, you might be reconsidering supplemental coverage.

Agents get commission to sign you up for services

When you're at the rental car counter, you may feel like you're being pressured into getting all sorts of supplemental coverage. You probably are being pressured, and heavily! Supplemental coverages offered by rental car companies is, for the most part, a huge money-maker for rental car companies. In the vast majority of cases, renters will never use the coverages. So this adds up to big profits for the rental car company, especially if you're paying anywhere from $15 to $200 per day for various coverage. As an incentive, most rental car companies give commissions to the agents in order to get more people to accept supplemental coverages. Because the agents are getting commission, you have to take what they say with a grain of salt. They have an incentive to get you to sign up for all the extras.

Not cheap, but rental car companies like to nickel and dime

Supplement coverages offered by rental car companies isn't cheap. There's a pretty hefty markup, especially since it's typically targeted toward drivers who don't have insurance, whose insurance was cancelled, whose insurance doesn't meet minimum requirements (liability only), or who are worried about being responsible for any damages. Rental car companies also know that you are more likely to accept supplemental coverages after a long and stressful flight, where you face tough last-minute decisions and aggressive sales tactics. But costs for supplemental coverage can add up quickly.

Crashes and mishaps are more likely in rental car

It's a fact that you are more likely to have a crash in a rental car than if you were home driving your own car. First, you're in an unfamiliar vehicle with unfamiliar gauges and buttons. Instead of figuring out how to work the radio, you were in a hurry and just got in the car and started driving. So you're probably figuring these things out as you're driving down the road. But you're also likely to be in a new city with unfamiliar surroundings or even a new state with small but significant differences to traffic laws, signs and road markings. Add any unusually high traffic, such as during the holidays, and a GPS unit and it's a recipe for a crash. The exact percentage increase of your crash risk depends on a lot of factors, and may be extremely low or pretty high. But the increased risk is definitely there. For this reason, you might want to consider supplemental coverage if you think the risk will be very high or if you think you might not have enough coverage on your own.

collision damage waiver isn't insurance

You may have seen the check box on the rental agreement to decline the collision damage waiver and loss damage waiver offered by the rental car company. A collision damage waiver and loss damage waiver isn't really insurance in the usual sense of the word. You're just paying a fee to get let off the hook if something happens to the rental car. If you accept this coverage, the rental car company waives its rights to come after you for certain damages.

It can be wise to purchase this waiver, especially since the cost is usually reasonable, if you want the added protection. You own insurance might pay for most of the damages done to a rental, but not all damage or fees, such as loss of use and diminished value. It can also help you out if you fail to notice damage that was done to the vehicle before you drove off. It only covers the rental car, not other vehicles or property. And it won't cover the car if you take any risky behaviors, such as using the car off-road or if you speed or drive after drinking. It won't cover any expenses if you cause a crash that damages other vehicles or causes injuries.

If you accept this coverage, make sure to read the fine print carefully to know what is and is not covered.

personal accident coverage

Personal accident coverage includes medical bills, ambulance costs and even death benefits for you and your passengers. But you probably don't need this coverage since you more than likely have it included in your primary auto insurance or health/life insurance policies. A rental car agency may even be required to have this coverage built in by law depending upon where you are.

Personal Effects Coverage

Personal Effects Coverage takes care of theft of your possessions from the rental car. It only goes up to a certain dollar limit, so it won't cover too much. But many homeowners and renters insurance policies already covers you for possessions stolen from your car, be it yours or a rental. If you regularly travel with expensive items, you may consider opting for this protection to help cover your loses.

Research first; check the boxes later

If you wait until you're at the counter signing your paperwork to decide on which coverage, if any, you want from the agency, you're out of time. Before reserving your car, you should have already checked your insurance policies to see what kind of coverage carries over to your rental. Don't automatically assume that your existing policies or your credit card protections will cover you in case of a loss.

You should also get in the habit of taking precautions to ensure you aren't unjustly charged for damages that you didn't cause.