Renting a car for your vacation in Europe is just the first step in planning a road trip. Now you have to make some key decisions: whether to buy rental car insurance and, if so, whether to purchase a specialty policy or get insurance at the car rental counter.
If you are traveling to Europe and renting a car, you have three main insurance options for your trip.
1. Free coverage through your credit card
Your first call should be to your car insurance carrier or agent, although most U.S. personal auto insurance policies will not cover you in Europe.
However, your credit card might offer coverage for free. In that case you might not need to buy rental car insurance at all.
To find out what benefits you have, call your credit card company and ask about insurance coverage for European car rentals. Major credit card companies typically offer insurance for damage to the vehicle up to a certain amount, such as $50,000, plus other expenses such as towing. This may be referred to as collision damage waiver (CDW) or loss damage waiver (LDW).
Note this insurance will probably not cover the cost of injuries incurred in an accident or other liability. If you have significant assets, you should check with your insurance agent about umbrella liability coverage, which may cover you abroad.
If you opt to go with your credit card insurance instead of purchasing other coverage, be sure you are listed as the driver and pay for the car rental on the card that offers the coverage. You will also have to decline the rental car agency’s damage waiver coverage. If you fail to do either of these things, your credit card will not offer you any protection.
Some credit cards exclude coverage for certain types of luxury cars and won’t cover you in certain countries, such as Ireland and Italy. And be aware that if you’re in an accident, the rental car company will charge your card for the damages while your claim is being processed by your credit card company. You may have to wait for reimbursement.
2. Stand-alone insurance policies
If your credit card does not provide coverage, you can buy insurance specifically for one trip or for an extended time frame.
One option is trip insurance, which can prove coverage for car rentals as well as trip cancellation and trip interruption.
Trip insurance comparison website InsureMyTrip.com allows you to get quotes from multiple travel insurance companies. Quotes for travel insurance for one week in Britain — including car rental insurance, trip cancellation and trip interruption — range from $104 for a policy through HTH Worldwide to $240 through Allianz Global Assistance.
But if you are just looking for car rental insurance, you can find even lower rates through InsureMyRentalCar.com. Launched last year in the UK, Insure My Rental Car currently sells damage waiver insurance with up to $100,000 in coverage to consumers in all states except Alaska, Florida, Hawaii, Massachusetts and Vermont.
The cost: $17.50 for up to 31 days or $93.99 for an annual policy. Coverage can be purchased from six months to one day in advance and covers your rental car use both at home or overseas.
“We’re trying to change the way people shop for rental car insurance, and give you a better deal,” says CEO Ernesto Suarez.
A survey for Insure My Rental Car conducted by market research firm YouGov found that buying insurance at the car rental counter can be expensive, adding nearly 50% to the cost of the rental in some cases. For example, renting a compact family car for a week in August in England costs about $467, plus $216 for CDW insurance. That same vehicle in Amsterdam would cost $283 for the rental, plus about $108 for insurance at the car counter.
The low cost for protection through Insure My Rental Car makes it an appealing option.
3. Buying at the rental car counter
It’s no fun to travel across the globe only to show up at a rental car counter and feel pressured into buying insurance. While this is generally the most expensive option, it might be the best choice for adequate coverage and peace of mind if you haven’t bought another policy or if you’re unsure about your credit card benefits.
Also, you may be uncomfortable relying on credit card coverage because damage charges will end up on your statement, leaving you to foot the bill temporarily and perhaps worry about being reimbursed by the credit card company.
“While the insurance is expensive, taking the coverage means you can sleep at night, as you don’t want issues in a foreign country,” says Neil Adams, president of car rental consulting firm Abrams Consulting Group in Purchase, New York.
While buying at the rental car counter is always an option, using credit card benefits or buying a policy online ahead of time will save you time and money. With those options, you’ll hit the road faster with more cash in hand.
Image via iStock.