As someone that worked in the insurance industry for a number of years, and that regularly rents cars to travel cross country, I can honestly say that it is often best to pay for the rental car company's insurance and here's why.
By using your own insurance carrier that doesn't offer accident forgiveness or a zero deductible insurance policy, you expose yourself to the possibility of having to pay your comprehensive deductible to the rental car company for whatever damages that they claim weren't there prior to you taking possession of the rented vehicle that purportedly had no damages to speak of prior to the contract being signed. In addition, points will be added to your driving record and your insurance rates will increase if a claim is filed on the basis of a collision, and if it exceeds a certain dollar amount, which certain less than honest rental car companies will make sure happens. The claim will be for 1000.00 or more which will earn you one or two points on your driving record depending on whether or not the accident resulted in a bodily injury claim, meaning that the other party suffered injuries that resulted in medical treatment of some kind.
The Department of Motor vehicle takes these kinds of accidents seriously because the driver is potentially a threat to public safety since automobile accidents often result in permanent paralysis or in death, and if there's no bodily injury involved why have a point added to your driving record for a minor collision that may or may not be your fault when you can just as easily use the rental car company's insurance?
Some insurance carriers issue automobile insurance policies that will automatically cover the insured driver for high coverage while they're driving through a different state. For example, California requires 15,000/30,000 for bodily injury and 5,000 for property damage; however, some states require higher coverage, so the policy will cover the driver at a higher limit based on whatever the state's requirement might be, which could be 25,000/50,000 for bodily injury and 15,000 for property damage. Not all insurance companies provide this kind of added coverage and this is why liability coverage from the rental car company might just be the best way to go since there's a specific limit on most insurance policies which means that the driver is ultimately responsible once that limit is reached unless they have a personal umbrella policy that covers them for up to 1,000,000. And even a million dollars in coverage isn't enough in some cases where bodily injury is involved and especially if the injured party requires long term care for the rest of their life.
Without the aforementioned automatic increase in coverage the driver is responsible for the difference, which could result in a civil suit, and this is indeed why a thorough check of the individual insurance coverage is advisable prior to taking a road trip since you might not have adequate coverage. Plus you should always check to see what the insurance requirements are for the state that you'll be visiting if you plan to use your own insurance carrier instead of taking the liability and comprehensive and collision coverage that's offered by the rental car agency.
Credit card companies vary when it comes to renting a vehicle and most are only secondary, meaning that the driver must have his or her own personal auto insurance policy before they are covered by the credit card company and this is why the cardholder must read the terms of the credit card before renting a vehicle since the devil is in the details.
A good example of the devil being in the details is the fact that Diners Club will allow you to rent a car for up to 45 days where as American Express will not allow you to rent a car with coverage for longer than 30days. Visa will allow a rental in your country of origin for up to 15 days and if you're outside the country you can rent for up to 31 days. MasterCard allows World and World
Elite cardholders to rent for up to 31 days and all other cards are limited to 15 days. Discover allows up to 31 days for personal use and 45 days if the rental was made on a Discover card that was granted to a business or to an organization.
In addition, Discover does not cover loss of use charges. (the going rate to rent the vehicle on a daily basis) American Express, MasterCard, and Diners Club want to see the fleet utilization log before they'll pay reasonable loss of use charges. They take this approach because they want to make absolutely sure that the company suffered an actual hardship by not being able to rent any other vehicles in its place, which means that the customer will have to pay the going rate for the vehicle while it's in the repair shop. This will also include administrative fees that are associated with filing the paperwork for the loss of use, which I might add isn't covered by all automobile insurance policies which is why the driver must check with their insurance company prior to renting a vehicle that they expect to be fully covered by their personal automobile insurance policy.
Visa has been known to pay the loss of use fees, however, the driver should check with their individual credit card company before assuming that the loss of use fees will be covered if there's an accident or if the car suffers non-accident related damages that require it to be taken out of commission.
Gold Cards will cover most rented vehicles for theft as well as for physical damage which means that they generally cover much more than most lower ranking credit cards since pickup trucks and U-Hauls and suvs and motorcycles generally aren't covered by all credit card providers. Before renting a car the cardholder should find out from their credit card company which vehicles are covered and which ones are not because the rental car company isn't responsible for keeping up with what each credit card company covers, which means that the consumer is ultimately responsible at the end of the day since the rental car company offers their own insurance to cover whatever they're renting.
Rental car coverage in other countries is always based on what the individual sovereign country will accept as acceptable insurance coverage despite what the insurance carrier or the credit card company might say. For example, anyone traveling to Mexico must obtain Mexican insurance prior to traveling to Mexico because the individual driver can be arrested if he or she is found to be without an insurance policy that is acceptable to Mexico. Americans have been jailed after getting into an accident while traveling on a Mexican road since no one ever advised them that their American car insurance or that their credit card company coverage is not accepted by Mexico since they have their own requirements as a sovereign nation. I have met several people who had their cars impounded in Mexico after getting into an accident. The car wasn't returned since they didn't have the proper insurance. This is why a letter of permission is needed from the lending institution prior to a brand new car being taken across the border since the laws are different and since the vehicle might not be returned. This has happened to a number of people that didn't know the rules and that just assumed that the laws were the same as they are here in the United States.
Canadian liability insurance is also a good thing to obtain from your insurance carrier or from a reputable place that offers it prior to traveling to Canada. Again sovereign nations have their own laws.
Something to remember before renting a vehicle: An elderly gentleman was told by a rental car company employee that he had to back the rental car into a tight space that even the most skilled driver would have trouble negotiating, and after he ran into the side of the building and hit another vehicle in the process the repair bill came up to $6,000 which caused his insurance to increase by $600.00 for a period of three years. Plus he had to pay his $500.00 deductible to the rental car agency since his policy provided comprehensive (fire and theft) as well as collision, which covers hit and run accidents as well as at fault collisions, which is collectively determined by the car insurance industry to be 51% of the driver's fault.
What happened with the elderly gentleman is what often goes on behind the scenes when you advise certain unscrupulous rental car companies that you want to use your own insurance and that you have deductibles on your personal auto insurance policy. The rental car companies are not regulated by the Insurance Commissioner and use out of state individuals that routinely rule against the driver and this is why it's best to purchase their insurance because you walk away without impact since the vehicle is covered by the car rental policy and since you don't have to file a claim through your own insurance company, which could potentially impact you for 36 months if you don't have accident forgiveness.
These are just some of the things to consider before signing a rental contract. Most insurance carriers won't take the time to educate their customers and the rental car companies are not responsible for educating the public since their business model only allows for profits and for sustained business. The car rental agencies cannot be blamed for the general public's lack of understanding or because your individual insurance carrier has neglected to inform you about your coverage or because you have failed to ask for a policy review prior to renting a car.
Be smart and ask for a policy review prior to renting a vehicle and do not assume that your credit card company is going to cover you in the event that you get into an accident because most credit card companies require you to have your own personal automobile coverage and will only cover the difference once you reach your policy limits or if you have a towing bill that's the result of the car accident.
Carmichael Wolfe "The Eclectic Novelist"
Host of Lyceum Of The Wolfe
Author of The Playground