Renting a car? Know the meaning of 'no'

A friend of mine was in a non-injury fender bender while on vacation. 

It put the rental car out of commission, so he arranged for alternate transportation and finished his trip. A quick call to his insurance company confirmed he was covered with the same terms and deductibles as if he’d been driving his own car. 

No big deal, right?

That’s what he thought – until he received a bill from the rental car agency a few months later. The agency informed him that he owed them for the time the vehicle was being repaired and not rentable. The bill included a charge for the reduced value of the vehicle due to the accident. And the company charged him for administrative costs associated with sorting out the situation. 

The total was a hefty $1,500. He called his insurance company and was shocked to learn that those particular losses were not covered by his auto insurance. 


However, my friend’s story has a happy ending, thanks to his credit card company. One of the benefits of his card is protection that covers what his auto policy doesn’t. Does yours?

With the holiday season upon us, it’s a safe bet that some drivers are paying more attention to their shopping lists than the traffic around them. That makes now a good time to review your coverage options so a rental car accident doesn’t turn your vacation into a financial nightmare. 

Here’s a brief summary of four major coverage options you’ll be presented with next time you rent a vehicle:

Loss damage waiver. Normally, this coverage runs $10 to $20 per day and prevents the rental car company from holding you accountable for damage to the vehicle or loss of use, towing or administrative charges. However, the company may still file a claim against your auto insurance that may show up on your driving record.

Liability. This coverage extends the protection provided by your own policy if you are found liable in a lawsuit after an accident. The typical cost is $7 to $14 per day.

Personal accident insurance. This covers any medical and ambulance charges incurred by you or your passengers. Your auto policy might include Personal Injury Protection (PIP), or you could be covered by your medical insurance. Typically, this runs $1 to $5 per day.

Personal effects coverage. This insurance covers your personal possessions inside the car if stolen or damaged. Your homeowners or renters policy may also cover this type of loss, subject to deductibles. This protection costs $1 to $4 a day.

This holiday season, before you blissfully forgo the insurance when renting a car, check with your insurance carrier, credit card company and any other membership organization that might provide protection. Know how well you’re protected before you initial any boxes that say “declined coverage.”


J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.