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Car rental insurance confusions

Car rental insurance confusions

Old Jun 5, 19, 11:58 pm
  #1  
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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?
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Old Jun 6, 19, 12:32 am
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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.
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Old Jun 6, 19, 12:36 am
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Originally Posted by dzdang View Post
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?
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.
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Old Jun 6, 19, 12:42 am
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Originally Posted by Toshbaf View Post
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.
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?
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Old Jun 6, 19, 12:51 am
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Originally Posted by dzdang View Post
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.
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Old Jun 6, 19, 12:55 am
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Originally Posted by Qwkynuf View Post
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.
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Old Jun 6, 19, 1:08 am
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Originally Posted by dzdang View Post
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.
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Old Jun 6, 19, 1:13 am
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Originally Posted by Qwkynuf View Post
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.
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Old Jun 6, 19, 1:33 am
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Originally Posted by dzdang View Post
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?
Some car rental companies charge for additional drivers. Hertz, Avis, National don't or usually does not. Some smaller companies sometimes do charge extra for additional drivers.

The credit card's coverage is secondary. If there were a collision, the cost of the rental car damage would be paid for by the University's insurance. If they don't pay or there is no University coverage, then the credit card's program pays. Many credit cards offer primary coverage for car rentals outside the United States. In that case, the credit card's program will pay first before the University's.

Exception is Ireland. Credit card companies that have car rental coverage exclude Ireland. I think they also exclude Greece but I am not sure. The credit card brochure says what countries are excluded. Very few countries are on that list. UK is not on that list of exclusions.
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Old Jun 6, 19, 2:55 am
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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.
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Old Jun 6, 19, 11:17 am
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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.....
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Old Jun 6, 19, 11:22 am
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Originally Posted by Exec_Plat View Post
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.
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Old Jun 6, 19, 12:05 pm
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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.
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Old Jun 6, 19, 1:13 pm
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Originally Posted by dzdang View Post
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?
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.
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Old Jun 6, 19, 1:39 pm
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Originally Posted by Qwkynuf View Post
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.
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.
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