Car rental insurance confusions
 

I have a couple of confusions regarding car rental insurance. This is for car rentals in the U.S.

Question 1:
My University provides car insurance if booked through the University's website (it links to Enterprise/National). However, my University recently changed its policy that it will only offer insurance for the car rental if the renter is conducting university travel. It used to be such that they also provided insurance for personal travel.

I feel like there are some gray areas with this program. Say that I'm on a university travel for some academic conference. During the middle of the conference, I go to a nearby entertainment area (clearly not FOR university travel, but I guess I am still ON university travel) and something happens. I asked my University what would happen in this circumstance and was told that the University insurance would not be applicable here, and that my personal auto insurance would kick in. However, I don't have personal auto insurance. So does that effectively make it illegal for me to drive the car in this scenario, since I am technically uninsured?


Question 2:
This is not related to Question 1.
It seems car rental insurances typically insure the car and not the person driving. So say I am the primary renter on a car and I purchase the rental companies' auto insurance. If I add a secondary driver, is that driver also covered by the auto insurance?

Question 1

In the US, the car rental company provides liability coverages. The insurance that they sell is technically not insurances but CDW (collision damage waiver). Sometimes, they will sell extra liability coverages.

Liability coverage is to pay for the other driver injuries and damaged car if you are at fault.

If you don't buy CDW, you have to pay for the damages to the rental car.

Question 2
Additional driver not covered unless you tell the car rental company. They will ask to see that person's drivers license and also put that person's name on the paperwork. That person will have to be present at the time of rental.

If someone cheats and does not tell the rental car company about the 2nd driver, if there is a collision, they may be able to force you to pay for everything.

Some credit card companies cover CDW if you use the credit card for the rental.

Note that my responses are my opinion, but they are based on my experience:

#1 ) Typically, this distinction is based on the intent of the trip (i.e. why was the car rented). They are not trying to keep you from driving the rental car to the drug store while you are out of town for a conference, they are trying to not be on the hook for your family road trip to Wally World. Also, in the example above, the University insurance would probably cover the loss and then try to recover from you personally if they felt like your use of the vehicle was improper. That said, I think that what they told you is likely incorrect.

#2 ) In the USA, outside of California, the rental company provides basic liability - damage that you cause to other people's property - as part of your rental. They also *sell* insurance for damage that might occur to the car while in your possession - they usually call it "CDW" or "LDW" (Collision or Loss Damage Waiver). So, based on this, a 2nd driver who has been properly added would be covered exactly as you (as the primary driver) are. So, if you (or your secondary driver) runs a stop sign and hits someone's car, The rental company insurance would cover the damage to the other car (up to policy limits, with you on the hook for anything in excess of that), but if you didn't pay for the Collision Damage Waiver, then your personal auto insurance (or you personally, if you don't have it) would pay for the damage to the rental car itself.

Note though that the rental company's liability insurance tends to have pretty low limits, so if you sideswipe Tracy Morgan's Bugatti you can expect to be on the hook for some significant out of pocket expense because the rental insurance probably hits its limit at $30k or less.

Thanks for explaining. I always get confused about insurances coverages, especially since it's been years since I've had auto insurance, and I've never had my own insurance.

Regarding Question 1. I would pay for the rental with my credit card and book it through the University, either with National or Enterprise. The car rental company would designate that my University is covering the insurance on the car. But since I paid for it with my credit card (which does have the normal car rental insurance coverages, but idk how it works in this case), does my credit card also provide another layer of insurance? This is probably a unique question that I should check with my credit card company?

Regarding Question 2. Isn't it usually free to add additional drivers? Or at least it has been in my case. If so, then why would people cheat?

Different organizations have different terms negotiated. As an example, my company rate is generally $35-$39 per day, pretty much everywhere in the USA. That rate includes CDW and allows any employee of the company to drive the car. If I don't use my corporate rate, CDW is extra, extra drivers are extra, and the daily rate is usually double or more.

So the terms really depend on what your University negotiated with National.

Ah, I think that is the case for me as well. I think that would mean my credit card would not be able to cover it since it was paid at a discounted rate.

No, your credit card should cover, because it covers *you*. It is assuming your personal liability.

Try this:

• You rent a car on university business
• Scenario 1: You run a stop sign and total someone's 1992 Geo Metro (thankfully, no one hurt)
  • The rental company's basic liability covers the full cost of the damage to the Geo
  • Your credit card doesn't get involved because it is "secondary" insurance and only comes into play if the rentals company's maxes out.
  • You are on the hook for any damage to the rental that you are driving, unless your university's agreement includes CDW or you have paid separately for it.
• Scenario 2: You run a stop sign and total someone's 2019 Porsche Carerra (thankfully, no one hurt)
  • The rental company's basic liability covers the cost of the damage to the Porsche, up to their liability limit.
  • Your credit card is "secondary" insurance and pays any excess damage costs up to their own liability limit.
  • If your credit card insurance maxes out and there is still damage to pay for, your personal auto liability would cover (if you have it)
  • If you don't have personal liability insurance, you are on the hook for any remaining costs
  • You are on the hook for any damage to the rental that you are driving, unless your university's agreement includes CDW or you have paid separately for it.

Got it! I'll confirm with my credit card to see if they would cover. I think last time I checked with Citibank's Costco Visa Credit Card, and I remember the rep saying something along the lines of me having to use the card to pay for the rental in full, decline the rental's CDW, in order for the insurance to be in effect. I thought there was something about the credit card company also not being able to cover if you paid at a discounted rate, but on second thought, I might be misremembering that.

What I have found, in a more general sense, is that rental companies' national sites tend to offer insurances on rentals appropriate to that nation's residents. So, for example, for a rental in NY, Hertz US site will include or push one type of insurance and the Hertz UK site will include or push different insurances. The US site is aware that US auto policies and credit cards include certain coverages for rentals, whereas UK ones don't. I find it's best to use your home country rental site or agency regardless of where you are renting.

Correct me if I am wrong, but dzdang's location is 'secret'...hence we have NO IDEA where they live nor in which country their credit card is issued. (Id guess USA, since he said citibank costco, but not sure)

Credit card insurance rules vary based on both country of issue AND country of rental

Finally many (most?) USA cards will not cover in Australia, New Zealand, Ireland and Israel. However this can be different based on card. I do know, for a $4500 fact, that AMEX didnt cover in Oz in 2011..... ;)

I live in the Bay Area. I don't plan on doing any international rentals. Just national rentals in the forseeable future.

Our corporate insurance covers normal use of the car on a business trip. So if "entertainment area" is the place you went to dinner in the same city as the business trip, then that is covered (at least in our case). If it's a 500-mile side roadie to Vegas, probably a different story.

Rules are different for California, so be careful of that. The only way to know for 100% is to read the terms. For example, the last time rented from Hertz, if you totaled the car, your only liable for $500 max, but at the same time I don't think liability comes with the rental. I'd do you research based on whats the law in California if your renting in California. My own car insurance covers me in rentals and my Chase United Club card covers the total value of the car so I do not buy extra coverage.

I'm afraid that your analysis is mistaken on a few points:

1. The rental-car coverage provided by U.S.-issued credit cards only covers damage to the rented auto; it does not provide any third-party liability insurance, which is what would be needed to cover injury to third parties, or damage to other people's property.

2. For credit-card coverage to apply, one typically must decline the rental company's LDW. If you are renting on a contract rate that includes the LDW, then you obviously are not declining the LDW, so there would be no credit-card coverage.

3. If the renter is relying on the rental-car company's "free" liability coverage (not available in California), be aware that, in all but a handful of states, if the rental company must make a payment to a third party because of the renter's actions, the rental company can go after the renter for that amount. There are only about half a dozen states where a renter who does not have a personal liability insurance policy gets "primary" third-party liability coverage from the rental company. (It's also possible to get primary liability coverage if you are a member of certain organizations -- like AARP or USAA -- and rent from participating rental-car companies using the organization's discount code.)

Those who do not own a car but who rent cars with some frequency should consider obtaining a personal, non-owned-auto liability insurance policy. Mine is issued by Travelers Insurance.

I kept this for a couple years with USAA. A non-owner policy was something like $120/yr in the early 2000's.

Please continue to follow this thread in the FT Travel Products Forum. Insurance-related issues are typically discussed in that forum.
Thanks..
Obscure2k
TravelBuzz Moderator

I can't find this product on their website. How did you get this coverage? I would like to have this type of policy.

Use the "agent locator" engine on the Travelers website to find a local agent near you. Then call the agent and ask if Travelers offers such a policy in your particular state.

You rarely, if ever, will see a named none owner policy listed on a companies website or even in their brochures.

I owned and operated an insurance agency for 40 years, and if I sold two of those a year, that was a lot. Most agents rarely write one.

You can expect a range of priced, so shop around. I would expect the rates, depending on where your primary residence is, to be somewhere between $300 to 600 a year. My suggestion would be to call a few local insurance agencies to get some quote.

Not necessarily. Some CCs just require you to decline any optional coverages. For example in some countries there is a mandatory base coverage on all rentals. You just need to decline any added coverage.

But I'm talking about contract rates which include LDW. (And if the contract rate includes a zero-excess LDW, then it wouldn't matter even if the credit-card coverage were activated: there would be nothing for the credit-card coverage to cover, if you rented on a contract rate that included a zero-excess LDW.)

SO you are saying, categorically, that a CONTRACT rate that includes any LDW (full or to some deductible or some limited coverage) will result in 100% loss of any CC cover?

It has been my experience that as long as you decline any optional cover to the extent you CAN decline, the CC cover is not in jeopardy.

YMMV

If you are, in fact, offered any form of LDW by the car-rental company and you decline it, I assume that credit-card coverage would be activated -- even if you booked on, say, an AARP association discount rate which limits liability for damage to, or loss of, the rental car to $5,000. But the OP is a university employer contemplating booking on a university contract rate. I assume -- but do not know -- that if that rate includes coverage for the rental vehicle, it is zero-excess coverage, so LDW would not be offered by the rental-car company at time of pick up, and therefore could not be declined. If the university's contract rate provides for something other than zero-excess coverage on the rental vehicle and the contract rate permits the rental-car company to offer full LDW coverage for an additional fee, that would be a different story.

I am aware that in some foreign countries, included LDW coverage might not be zero-excess coverage, and the renter is given the option to accept or decline additional LDW coverage. I assume that a renter who declined that coverage would receive credit-card coverage (unless the renter rented in a country on the credit-card company's exclusion list).

Here in the U.S., some car-rental companies (I'm thinking the Enterprise group of companies) offer "waiver-saver" LDW coverage at a lower price than full LDW coverage. I assume that if a renter were to accept waiver-saver coverage, then the credit-card's insurance would not cover any loss not covered by the waiver-saver coverage. But that, of course, is a different situation than renting on a contract rate that includes full or partial coverage.

Edited to add: Here's what my alma mater says about LDW coverage on contract rentals with Avis/Budget:

"Loss Damage Waiver (LDW) for loss or damage in excess of $500 is included in the rental rate on rentals for “business purposes”"

I don't know if my alma mater's contract permits Avis/Budget to offer additional coverage at time of rental to eliminate that $500 excess. My guess is that the university is willing to self-insure to the tune of $500 per rental, and wouldn't want employees to spend additional university funds to eliminate that excess. Bur I'm just an alum who only rents for leisure -- not university business -- so I can't say for sure what happens on a university-business rental.

Some other threads on a some what similar topic

• https://www.flyertalk.com/forum/rent...ar-rental.html
• https://www.flyertalk.com/forum/rent...insurance.html
  
• https://www.flyertalk.com/forum/rent...stly-rent.html

I have a question on the claim process through the credit card CDW. Lets say I have ignored car rentals CDW and opted Credit Card CDW. Assume there is a damage to my rental car and the car company assess expenses of $2000 . will this be charged to my credit card immediately and what happens if my credit card limit is only $750

Whether the rental-car company is permitted to immediately charge your credit card for the estimated amount of the damage will depend on the law of the jurisdiction where the rental occurred. I'm sure that it's prohibited in some places, and permitted in others. Some rental-car companies will also work directly with your credit card's insurer; some companies won't.

If your credit-card issuer will not permit an over-limit charge, then a $2,000 charge obviously won't be permitted if your card has just a $750 credit limit.