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Saving Every Day - Driving Down Car Rental Costs

--A ClearPoint Consumer Credit Counselor Investigates Insurance Coverage

After you circle a used econo-car looking for dings, the sales rep asks me the inevitable, "Would you like to purchase our supplemental insurances?" Thinking, thinking, thinking. What did my insurance rep say? Didn't coverage come with my credit card? Yeah, it's a scam, You know better. You decline.

Then she says, "Who's your auto insurance company?" You tell her. "What's your deductible?" "Not sure, $500, maybe $1,000," you respond. In large block letters she writes "$500, INSURANCE" on her form. "So, if you damage your car," she adds, "we'll take the $500 deductible immediately and put a $1,000 hold on your credit card." Is this a new sales tactic? You're thinking maybe you should just get the insurance for piece of mind.

Should you get into an accident, you rationalize that your own insurance coverage will cover it, You'll just have to endure a lot of paperwork. You're willing to take the risk to save $20+ dollars a day. You'll drive carefully. Still, you're not sure.

"Thoroughly confused" when renting a car?
Apparently you're not alone. The National Association of Insurance Commissioners (NAIC) surveyed 632 consumers* and found:

• Approximately 42 percent were thoroughly confused or had only a rough idea about insurance coverage when renting a car.
• 34 percent said they purchased the rental company's insurance just to make sure they were covered.
• 24 percent were not sure whether their credit card provided insurance or not.

Credit card rental insurance policies
You decide to research this further, once and for all. You check the VISA web site and read that, as long as you decline the rental company's collision damage waiver, the credit card company will cover:

• Collision and theft on auto rentals
• Up to the actual cash value of most rental vehicles
• The damage or theft not payable by my auto insurance policy-including your deductible
• The entire cost if you do not have auto insurance
• Loss-of-use and administrative charges imposed by the rental car company

There's a list of exceptions, of course, the most important being:

• For coverage, cars must be rented less than 15 consecutive days
• Losses must be reported within 45 days
• The benefit doesn't cover rentals in certain countries
• Some vehicles are exempt (like cargo trucks and exotic cars)

MasterCard and American Express also insure some card holders, but their plans have their own coverages and conditions. Call your card's issuing bank to learn what benefits you have prior to counting on this coverage. In your case, it looks good, you're covered.

Auto insurance coverage
So would it be better to just rely on your own auto insurance? A call to your insurance agent is in order.

With your policy (with liability, comprehensive and collision), she explains, you're insured for temporary use of rental cars within the U.S. And, as long as the rental is paid for with your personal card (not company card), even if you drive the car for business purposes, you're protected. To be eligible for any of these benefits, though, you'll need to keep "full coverage" (all three types). Your policy wouldn't pay for the rental company's "loss of use" and administrative charges.

The roundup on rental car coverage
Before taking any chances by declining a rental company's additional insurance, it's wise to learn about our existing coverages. Everyone's auto insurance policy is different, so the only way you can know if, or how, you're covered is to call and ask your agent.

Most importantly, to avoid risking dire consequences to your financial future, make sure you are covered by one or another type of insurance.

If you find that you need help with putting together a workable household budget that incorporates both daily living expenses and periodic expenses such as rental car insurance, contact the professional credit counselors at ClearPoint Credit Counseling Solutions (877-422-9045) today.

*NAIC research released November, 2007