Do You Really Need Rental Car Insurance? 8 Things to Know

Lucas Peterson

With every car rental transaction comes the slightly uncomfortable moment when the agent behind the counter tries to foist the company’s insurance on you. When this happened to me at Hertz at the Hilo International Airport in Hawaii a few weeks ago, I did what I always do: I firmly and politely said no, thank you.

It’s been ingrained in me that buying into the rental company’s insurance is a waste of money. In my case, it would have nearly doubled the price of my rental. I have personal auto insurance and was vaguely confident the credit card I used to rent the car, a Chase Sapphire Preferred card, offered some kind of coverage. Besides, I thought, nothing had ever gone wrong.

And then something went wrong.

 One minute I was on my way to an afternoon tasting on a Kona coffee farm, the next I was on a rocky shoulder with two flat tires in an area with no cellphone service and few houses, trying to find some way to call for help. In the ensuing hours and days, I learned some valuable lessons about what happens when you damage your rental car.

If something happens, you’re responsible.

Of the umbrella of insurances Hertz tries to sell you, the one you need to pay attention to is the loss damage waiver, which covers damage to the vehicle. If you don’t buy it through Hertz, it doesn’t matter if you were saving orphans from a burning building — if any part of the car is damaged, you are responsible, regardless of how it happened.

In my case, two flat tires was a “no-fault” incident that involved no other drivers. No matter: I was on the hook. Hertz would demand remuneration, be it out of my pocket or through personal auto, credit card or other insurance.

Know what your insurance covers.

Before you rent, find out what your card and personal auto insurance offer, and then supplement what they don’t through the rental agency. If you have personal car insurance with comprehensive and liability, it most likely will cover your rental car. Call your insurance company to verify. Filing a hefty claim with your insurance, keep in mind, will probably raise your premium.

Credit card rental car insurance can be primary or secondary. Primary means it’s a first line of defense. Secondary means it’s, well, secondary. “Many people incorrectly assume that all credit card rental protection is the same,” said Mark Orlowski, Marketplace Morning Report travel contributor. “If it’s secondary coverage, you’ll be forced to involve your primary personal auto insurance company and file a claim before you can get anything from your credit card company.”

The coverage offered by my Chase Sapphire Preferred card is primary, and offers reimbursement up to the value of the car if the car is damaged or stolen. It does not cover personal liability — that is, if you or someone else gets hurt.

Some cards, like the American Express Platinum Card, offer limited personal liability. Car rental companies offer supplemental liability insurance, typically increasing the coverage amount to $1 million. Do you need that much coverage? Probably not. Are there times when it makes sense? Sure, especially if you have a high deductible. 

AAA is worth it.

Instead of using Hertz roadside assistance to tow my car (which would have cost hundreds of dollars), I used my own AAA Plus membership, which provides up to four free tows per year, up to 100 miles each. The AAA Plus membership has other benefits too, like flat tire service — provided you have only one flat tire. In my case, with two flat tires, they would only tow my car.

Note that this applies within the 50 states — overseas it becomes trickier. There are international auto clubs, some of which offer reciprocal services.

It’s not over till it’s over.

When I got back to Hertz, I filled out an incident report, signed off on a vehicle inspection form that noted two tires were damaged, and paid $148 for the two tires right at the desk. I returned home, smarting from the additional cost but happy little else was damaged but my pride.

Then, nine days after the incident, I received an email with a lengthy attachment from a collections specialist at Hertz informing me that, upon further review, two wheels on my rental were scraped and needed to be replaced. The bill? $1,475.88. (Weeks later, I still haven’t resolved this.)

Call your personal insurance. Or don’t.

In the event your credit card claim is denied, you may find yourself calling your personal insurance provider months after the fact. And when that happens, they’ll probably ask why you didn’t call them sooner to report the incident.

Even though I was using my credit card as primary insurance, I called Geico to let them know what happened with my rental. They then filed their own report without starting an actual claim. That way, I will have the option of opening a claim later in the event the credit card insurance doesn’t come through.

Word of warning: Don’t call your insurance company with hypotheticals like “Hey, what if, say, my tires blew out on a rental car and I wasn’t sure if I should report it to you?” They’ve already started a report before you even finished the sentence.

Get copies of everything.

I was directed by Chase to a third-party site, eclaimsline.com, to file my claim. Upon filing, you’ll need copies of things you didn’t even know existed, let alone were in your possession.

You’ll occasionally get the feeling that benefits administrators are making you jump through hoops to wear you down, knowing that many people will give up on their claims if the process is difficult enough.

Some of these items can be comically difficult, or impossible, to obtain. I was bounced around for hours on the phone before getting my “proof of service” from AAA.

Itemizations can also be tricky: Card Benefit Services told me they required an “itemization” — not just a bill, or receipt — for the $148 I paid for the two tires. When I wrote to the specialist at Hertz asking for this itemization, she informed me that such a thing did not exist.

Take lots of phone pictures.

You shouldn’t only take pictures in the event of an accident: It never hurts to get before and after pictures as I did.

Mr. Orlowski, the Marketplace Morning Report contributor, referring to his own experience, said doing that “saved me many hours of headache when Avis billed me $518 six months after the rental was over for a golf-ball sized hole in the front bumper. I sent them the photo I had taken showing the bumper damage at pickup and the issue was quickly resolved.”

Turn down the arbitration provision.

When you rent a car through Hertz, you are, whether you like it or not, agreeing to private arbitration in the event of a dispute — an arbitration process that, among other things, does not allow for meaningful appeals and is heavily weighted in favor of the corporation.

With Hertz, the arbitration provision is buried deep in the fourth page of the rental agreement. Fortunately, you can opt out of forced arbitration with Hertz if you email them within 30 days of renting, saying you reject the provision.

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