Purchasing international car rental insurance is one of the most proactive steps you can take to prepare for a trip abroad. Whether you are traveling for business or for pleasure, it is well worth it to include this insurance in your travel budget.
Your Personal Liability
When you rent a car locally or abroad, you are personally responsible for any damage, theft or loss to the rental vehicle, regardless of who is at fault. If you choose not to purchase international rental car insurance coverage, you will be financially liable for the full value of the cost to repair or replace the vehicle, as well as any accidental injury or death to others. What's more, you will often be held liable for loss of use - the income lost by the rental car company from not having their vehicle on the road earning them money.
Given the nature of international travel and tourism, international car rental insurance companies are more flexible in the policy periods that they offer, which can range from a month up to a year. Unlike regular insurance policies, the individual coverages offered are optional.
Coverage Options Available
There are many coverage options that you should be aware of when considering if a policy is right for you.
Collision Damage Waiver (CDW)
This coverage option covers the cost of repairing or replacing the rental car in the event of an accident, theft or other loss to the vehicle. It does not cover damage that results from theft, attempted theft or vandalism. With this coverage, you will only be financially liable for the maximum amount of your non-waivable excess in the event of accidental damage to the rental vehicle. CDW only applies to you as the renter of the car and to any authorized driver.
CDW Non-Waivable Excess
When you purchase the CDW, a Non-Waivable Excess will apply. This is the maximum amount that you will have to pay to cover the cost of damage to the rental car. This amount will vary from one country and rental car company to the next.
The Non-Waivable Excess only covers you as the renter of the car, and any authorized driver. It applies to each individual claim or incident. So, if you have two accidents during the rental period, you will be liable for this amount twice.
The CDW Non-Waivable Excess is, essentially, the same as the deductible that applies on a regular US auto policy. It can also be regarded as the international equivalent of the Loss Damage Waiver (LDW) in the United States and Excess Reduction Fee (ERF) in Australia, New Zealand and a few other nations.
Theft Protection (TP)
This coverage option covers you for the cost of any loss or damage to the rental vehicle or any of its parts, which results from theft, attempted theft or vandalism. This coverage is also subject to a non-waivable excess - the maximum amount that you will have pay out-of-pocket to cover the cost resulting from a theft.
In some European countries, Theft Protection coverage is mandatory.
Third Party Liability
Also referred to as Primary Liability Insurance (PLI), this option covers you in the event that you are at fault in an accident while operating the rental vehicle. It will cover the damages for which you are held liable as a result of bodily injury to others or damage to their property.
Third Party Liability covers the amount that you are legally obligated to pay as damages, up to the amount stated on the policy. No non-waivable excess applies to this coverage. Third party liability is mandatory coverage in some countries.
Supplemental Liability Insurance (SLI)
This is additional liability coverage that protects you as well as any authorized drivers against any third-party bodily injury and property damage claims.
Personal Accident Insurance (PAI)
This is coverage for you and your passengers for injury, disability or death. It will provide compensation for the expenses incurred from any accidental injury or loss of life.
It covers you as the renter for any injuries received within or outside the car during the rental period; coverage to your passengers is limited to injuries incurred while they are in the vehicle.
Personal Effects Protection (PEP)
This option offers additional coverage for personal effects such as bags and other belongings in your rental vehicle. The coverage applies to you and your passengers' personal belongings.
Personal Accident and Personal Effects Insurance (PAE)
This coverage combines Personal Accident Insurance and Personal Effects Protection insurance, covering expenses that result from accidental injury, death or loss to your personal property.
Should You Buy International Car Rental Insurance?
Because it is temporary, short-term coverage, this rental car insurance can be quite expensive. However, it can prove to be far more expensive to choose not to have this coverage.
Despite the cost, taking out this type of car rental insurance is the most cost-effective way to minimize or even eliminate your financial responsibility that may result from accidental damage, loss or injury.
Do You Need Coverage?
If you plan on renting a car while abroad, you will need international rental car insurance to protect you in the event of an unfavorable incident. In some cases, your current policy may protect you, but it is necessary to confirm that all mandatory coverage is offered to protect yourself against substantial monetary and legal penalties.
Where to Find Coverage
International rental car insurance is offered by many types of providers.
When you retrieve your rental car, the company will offer coverage. It is only necessary to obtain if you do not have anything else in place as these are usually more costly. Reputable rental agencies offering international coverage include:
- Avis, a company that has received the top Customer Loyalty Index rating for 14 consecutive years by Brand Keys. There are locations in 165 countries around the world.
- Budget, a subsidiary of the Avis Budget Group, Inc., was established in 1958 that can be found in 3,000 locations in 120 countries worldwide.
- Enterprise, an internationally recognized rental car company that offers a variety of rental programs, including hourly options, car leasing and vanpooling. In 2012, Enterprise was recognized by J.D. Power and Associates as the top-ranking company in the North America Rental Car Satisfaction Study.
If your current provider offers coverage, it is wise to take this route since it is usually cheaper than that of the rental agency. However, claims can increase your premiums. These companies include:
- GEICO, a company that offers auto rental insurance coverage for customers who are visiting or living abroad through its partner, GEICO Financial Services. Policies are offered in over 200 countries; tourists, military and government officials, third-country nationals and expatriates qualify for coverage.
- Esurance only offers coverage in the United States and Canada, but extends protection to other countries through its affiliate, the International Insurance Group.
Coverage may be offered free of charge. However, it is prohibited in some territories. A major advantage of taking this route is the ability to avoid your insurance company if an incident occurs.
How to Evaluate Providers
Before selecting an international rental car insurance provider, be sure to consider a few factors.
Certain areas mandate select coverage that drivers must carry. Be sure that your policy has these available.
Price of Coverage
Although the cost of coverage will vary by location, compare the quotes from preferred providers.
Types of Protection
Inquire about the range of coverage provided. For example, do they offer at-fault, short-term or split policies?
Other Important Considerations
If you are on the fence about international rental car insurance, consider the risks associated with not carrying coverage. If at fault, you may incur monetary damages as a result of:
- Loss of personal property
To cut costs, it is important to research the coverage that you actually require while passing on any extra coverage that you don't need.