Insider’s Info on Insurance and Renting Cars
Without a doubt, the most confusing thing about renting a car.
In this FAQ we will do our best to explain some basic concepts about insurance and renting a car, as well as our requirements. Although this applies specifically to our company and to our state laws, most of this information is applicable to all rental car companies.
Q) Am I insured when I rent a car?
A) Yes. But not wonderfully. Car rental industry standards apply state minimum legal insurance requirements to our rental vehicles, and those driving them. So you are completely legal, and have liability coverage (again to state minimum requirements), but do not have great coverage in the case of collision (like hitting a deer).
Q) Not your car, but still your problem.
A) I can’t phrase it any better. No matter what the situation, and what personal coverages you may have with your insurance- you, the renter, are responsible for paying damages. If you are not willing to accept responsibility personally, we are not willing to provide you a rental car. It is you, the renter’s, responsibility to know what insurance coverages you have. If you get in an accident with one of our rental cars and do not have sufficient insurance coverage, we will pursue you personally for damages.
Q) How do I get better coverage and coverage for collision?
A) Easy. Decline Physical Damage Waiver. What this does is place primary responsibility on you, and your personal auto insurance. So, as long as you have full coverage auto insurance, with rental car coverage, driving one of our rentals is just like driving your own car. Same coverages, same deductible. This is typically the best choice for 95% of renters.
Option 2) is to purchase additional Renter’s Collision Protection insurance. This insurance isn’t cheap (currently $19 daily) but it will act as primary insurance in the case of collision, with a $250 deductible and $20,000 maximum payout. This means if you hit a deer and have purchased RCP, you pay us the deductible, sign some papers, and walk away. We handle the rest and it does not show up on your insurance. RCP does not cover everything, like Loss of Use or towing, so it is not a perfect system for all cases. However, we try our best to not charge Loss of Use.
Option 3) Sign up and purchase the American Express Premium Rental Car Coverage plan. $25 per rental contract (not per day) for $0 deductible with up to $100,000 in coverages. This is by far the best (and cheapest) collision coverage available.
Q) Doesn’t my credit card provide coverage?
A) Maybe. Credit cards really do not like to pay out for rental car damages. There are about 1-million exclusions, and they will drag their feet indefinitely on paying any claims. The only credit card coverage we have had any ease of dealing with is AMERICAN EXPRESS PREMIUM RENTAL CAR COVERAGE. This is the service you have to sign up for and pay an extra $25 for the duration of the rental contract. However, it provides $0 deductible for collisions and they actually pay!
Some things we have learned about credit card coverages in the past:
- Mastercard is the absolute WORST. It seems their technique is to drag a claim out so long that people eventually give up. Of the three claims we have had renter’s try to process, Mastercard has taken an average of 4-months to settle. Expect nothing but frustration dealing with MC.
- Standard American Express rental car coverage (Car Rental Loss and Damage Insurance) does not cover full-sized sport utility vehicles. Claim denied if you rent a Suburban. I imagine the small print for all other credit cards is the same with full-sized SUVs.
- Premium American Express coverage is the best! Please buy this, it is better for you and for me! Premium Amex Coverage. We will happily accept AMEX’s higher rate if you buy this. They are so much easier to deal with.
Each credit card is different and provides different coverages. Again, the only one we have ever had a positive experience with is the premium AMEX coverage.
Q) What is the Physical Damage Waiver? Do I want this?
A) Physical Damage Waiver/ Loss Damage Waiver/ Collision Damage Waiver: they are all the same thing.PDW/LDW/CDW for short. None are insurance. You will see these three letters in any car rental contract in the US. The easiest explanation is that PDW/LDW/CDW is a way for car rental companies to make more money. PDW assigns an additional daily rate payable to the rental car company that provides a finite liability to the renter for accidents in involving collision only (i.e. hitting a deer). Example, PDW costs renter $15/ day with a $1,000 maximum. Renter hits a deer, they pay rental car company daily rate, plus $1,000, and they walk away. Regardless of the cost of repairs, Loss of Use, or just about anything else. This system can work well for the renter, but it is rife with wording designed to minimize the companies actual exposure. If you read the small print, you will see the Prohibited Use of vehicle on the back voids PDW/LDW/CDW agreements. So if you drive on a gravel road- at any point of your rental term- you have voided your PDW agreement. Not practical for a rental car in Montana.
If you accept the PDW/LDW/CDW your insurance company, and/ or your credit card company will most likely deny coverage!!!
PDW in conclusion:
- If you have personal auto insurance with rental car coverage, accepting the PDW is not a sound financial idea.
- If you have additional primary collision insurance, such as our RCP Insurance, or American Express Premium Coverage, accepting the PDW is not a sound idea.
At Explore Rentals our PDW is exorbitant. This is because we do NOT want renters to accept/ purchase it. PDW is generally only good for the rental car company, not the renter.
Q) Can you tell this all to me in plain English?
A) We’ll try! The best, safest, and cheapest way to rent a car (with Explore Rentals or anyone else):
- Make sure you have “Rental Car Coverage” on your personal auto insurance. This usually costs about $20 additional per year and extends your full coverage auto insurance to rental cars.
- Sign up and pay for the American Express premium rental car coverage. $25/ rental contract for $0 out of pocket $100,000 for damage or theft. This is the best deal on the planet. Just remember you must pay the entirety of the rental car with your Amex.
- Decline the PDW/ LDW/ CDW. You must decline in order to get coverages from your personal and purchased insurances!
Follow these three steps and you have pretty much eliminated your potential accident-related costs of renting a car.