Twilight Park
April 5, 2022
I thought these couple of articles were helpful:
From my auto insurance company:
Certain rental car damage expenses are not covered by a personal auto policy. Which ones? More than you may think. This isn’t because personal auto insurance excludes them, but rather rental car agencies often charge expenses that go beyond its scope. For this reason, many rental car agencies offer drivers a damage waiver.
Rental Car Damage Waiver
A damage waiver is not insurance, nor is it typically required to rent a vehicle. Instead, it is an agreement where, for a fee ranging from $15 to $25 per day, the rental agency agrees to waive the renter’s responsibility for damage to the vehicle. As such, a rental car damage waiver does not cover liability incurred because of an accident injuring someone else, damaging their vehicle, or their property. For this protection, renters need to look to their personal auto policy or obtain separate insurance from the rental car agency. Damage waivers vary, so ask the rental agent what is covered and read the waiver.
Rental Car Coverage Under a Personal Auto Policy
Most personal auto policies provide the same level of coverage to a rental car as a vehicle listed on the policy itself. Thus, if the personal auto policy only provides liability protection, then it will pay for injury to other people or damage to their vehicles or property, but it will not pay for damage to the rental vehicle. For this coverage to exist, the personal auto policy needs to provide comprehensive and collision insurance (full coverage) to at least one of the vehicles listed on it.
But this protection will not extend to a rental vehicle if it is available for regular use. It will cover temporary rentals such as when on vacation. Also, personal auto policies have a defined territory outside of which coverage does not apply. For policies in the U.S., the coverage territory usually also includes U.S. territories and Canada. Thus, if vacationing abroad, obtain coverage elsewhere.
Non-Covered Expenses
But even if the personal auto policy provides full coverage, the rental car agency may charge expenses that are not covered. This issue can be illustrated in the following example where, after an accident, the rental company charges the driver’s credit card for the following expenses:
Cost of auto repair: $5,000
Administration fee: $200
Loss of Use: $300
Diminution of Value: $2,000
Assuming the renter has full coverage on a personal auto policy, it will pay for the cost to repair the vehicle, $5,000, minus the deductible. The renter is responsible to pay the remaining $2,500 plus the deductible out of pocket. And admittedly, these are legitimate expenses incurred by the rental agency.
For example, if the accident had not occurred, the rental agency would not have had the administrative headache of dealing with fixing a car. $200 for that is a conservative figure. “Loss of use” covers rental fees the rental agency would have earned while the vehicle was out being repaired. Again, a legitimate expense to the rental agency for which they should be reimbursed. But what is “diminution of value” and why is it so large? This represents the reduction in the vehicle’s market value due to being in an accident. Services such as opens in a new windowCARFAX track accident history on vehicles and cars that have been in an accident sell for less than their counterparts which have not. The $2,000 in this case represents that amount. This is of particular concern to rental agencies because they only keep vehicles a few years.
Certain credit cards, if used to rent the vehicle, will pay for loss of use as a client benefit. But they do not protect against diminution of value or administrative fees.
Before and After Expenses
The preceding example is a conservative one. For today’s vehicles, it doesn’t take much damage to reach $5,000 in repair expenses. But what if the accident were more serious and the rental agency determines too much damage was done to the car to warrant its return to the fleet, and they just want to sell it. In such a case, an even larger gap in coverage exists with personal auto insurance. The rental agency will charge the difference in the value of the vehicle on the day it was rented and its salvage value after afterwards, often termed a “before and after” charge. For example:
Vehicle value when rented: $30,000
Salvage value after accident: $10,000
Before and after expense: vehicle value – salvage value = $20,000
In this example, the renter is liable for the $20,000 in decreased value and personal auto insurance only pays for what it would cost to fix the car. If repairs would normally cost $12,000, that leaves the renter with an $8,000 bill, plus deductible, all out of pocket. This may seem unfair at first, but consider this is exactly what personal insurance policies are designed to do – to pay to repair a vehicle back to how it was before and get it on the road again. It is not designed to cover any reduction in market value. In fact courts have ruled that diminution of value is not covered because, if it was, it would provide better coverage for the rental car than a vehicle listed on the policy.
In the end, the choice is up to the renter. They need to decide whether the extra $15 to $25 per day is worth putting aside the risk. As an insurance agent, we recommend purchasing the waiver.
From Amex:
The Lowdown on Amex Premium Car Rental Protection
Do you have an American Express card in your wallet? If so, you may have heard about a service called Premium Car Rental Protection. If you’re wondering what this service provides and how it differs from your standard American Express benefits, don’t worry. We have the lowdown on what Amex Premium Rental Car Protection offers.
What Is Amex Premium Car Rental Protection?
American Express Premium Car Rental Protection is a paid, optional service for cardholders that can save significant bucks. The service offers primary coverage for damage or theft during your rental car reservation. So if you pay for a rental car with your Amex card and then get in an accident, you can use this coverage to file a claim. That’s great if you don’t want to rely on your personal auto insurance or buy the pricey coverage from the rental car company.
The over-the-counter collision insurance from the car rental company cost $20 or more per day of your rental. With Amex Premium Car Rental Protection, you would pay about that much for your entire rental period.
The big advantage of American Express Premium Car Rental Protection is that it’s a one-time cost for the entire rental period, so you won’t rack up huge daily charges for longer reservations. Plus, there is no deductible. Eligible cardholders must first enroll to use the service. Then be sure to use the same card to pay for the rental.
What Does It Cover?
American Express Premium Car Rental Protection offers two levels of coverage. The more expensive option covers up to $100,000 for theft or damage. It has the the same limit for accidental death and dismemberment coverage. This option also provides secondary coverage of up to $15,000 for medical expenses and $5,000 for personal property. Liability coverage is not included.
You can use Premium Car Rental Protection anywhere in the world, with the exception of a few countries: Australia, Ireland, Israel, Italy, Jamaica and New Zealand.
What Does it Cost?
American Express Premium Car Rental Protection can be relatively affordable, especially when compared with buying the rental company’s collision coverage. Instead of worrying about daily charges, you’ll pay a one-time fee for the entire rental period up to 42 days (or 30 days for Washington State residents). The final price of the service depends on which of the two coverage options you choose, as well as which state you call home.
States excluding Florida and California: Premium Car Rental Protection costs $19.95 or $24.95 for the entire rental period, depending on coverage level.
Florida: The service costs $12.25 or $15.25 for the rental period.
California: The service costs $15.95 or $17.95 for the rental period.
Premium vs. Standard Protection
Certain American Express cards already offer car rental benefits without enrolling in the Premium Car Rental Protection option, but the coverage is significantly more limited. The biggest difference is that most American Express cards offer secondary coverage, so you would have to go through your auto insurance first. The Premium Car Rental Protection option also provides higher coverage levels than the typical American Express cards. It also has a longer coverage period than the secondary coverage limit of 30 days.
Do I Need Amex Premium Protection?
So, should you enroll in Premium Car Rental Protection before your next trip? The answer depends on your personal situation. If you are already an American Express cardholder without a personal auto insurance policy, enrolling in the service is a solid option and likely cheaper than coverage provided by the rental car company. However, the expense may be unnecessary if you can rely on their personal auto insurance policy or if you have primary coverage through the Chase Sapphire Reserve or another premium credit card.
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