Think back to your oldest Halloween memories when you pulled on a costume and braved the spine-tingly weather to trick or treat in the neighborhood. Remember the looming dread that settled into your stomach as you entered unfamiliar property, when a floorboard creak or an eerie shadow through a window curtain made you want to turn around and run?
That’s the feeling some people get approaching the car rental counter.
This post, the seventh in our Hack Your Auto Insurance series, aims to ward off all the insurance-related scare tactics that rental companies use to pry open your wallet before you sign a contract and drive off the lot. We’ll discuss California laws governing car rentals, the various insurance-like products that rental companies sell, and free or low-cost alternatives. Finally, we’ll talk a little about how insurance affects carshare and rideshare, growing alternatives to car rental.
Car rental insurance laws
The quickest way to make car rental less intimidating may be to send out a team of attorneys to airport arrival halls all around California. Here’s what they would tell travelers heading to the car rental counter.
- A renter’s responsibility to the rental company is narrowly limited by law.
There are just two scenarios you really have to worry about as a renter, collision and theft. Defensive driving minimizes the risk of collision. And you have a lot of control in preventing theft. The civil code says renters have no liability for loss due to theft if the car key is in their possession, not in the car, at the time of theft, and they promptly file a police report.
- If you have insurance coverage, rental company claims should go to your insurer, not you.
Some people may be willing to spend money just to avoid the headache of dealing with claims processors in the event of a rental car collision, even if their existing insurance covers rentals. This is an unfortunate waste of money. The civil code says that renters can require rental companies to submit claims directly to the insurance carrier so they don’t have to be intimately involved in the claims process.
- Rental companies cannot require you to purchase a collision damage waiver.
If a California rental car company says you are required to purchase a damage waiver, optional insurance, or another add-on before you can drive off in a rental car, kindly show them Section 1939.13 of the civil code. This behavior is expressly prohibited.
- Rental companies must tell you that there may be no need for a collision damage waiver.
In some instances, California legislators go further than other states to protect consumers. Here, they’ve instructed rental companies to inform you that your existing insurance or credit card may provide rental coverage, that a damage waiver from the rental company may simply duplicate the coverage you already have, and you should check with your insurance carrier about your existing rental coverage. Rental companies are supposed to state these disclosures out load and provide them in writing. Listen up. They’re telling you something important. (Hint: think twice before buying an insurance product from a rental company.)
- Loyalty program participants get two chances to decline the collision damage waiver.
If all the disclosure requirements above didn’t get the message across, how about another one? The civil code says that people who join a rental car membership program should see a hanger on the rearview window or the steering wheel notifying them in big bold letters that a damage waiver may duplicate their existing coverage and providing a second change to decline the waiver if it was first accepted.
What are rental companies trying to sell you, anyway?
Now that we’ve looked at the consumer protections in the California civil code, let’s look at some of the products that rental companies are asking California consumers to buy. In this post, we’ve decided to concentrate on the companies with the biggest presence in California, those operating at airports in Los Angeles, San Diego, San Jose, and San Francisco. Where a parent like Enterprise Rent-A-Car operates additional brands like Alamo and National, we’re including insurance products from the flagship brand only.
This approach simplifies matters a lot. Instead of sorting through over a dozen companies, as you’d see in an online pricing comparison, we’re left with four flagship brands operating extensively in California:
Collectively, these companies offer a range of coverage. These include a variety of damage waivers that shield you from responsibility for damage to a rental car, insurance supplements that protect against liability if you cause a collision that injures someone else or damages their property over and above your existing insurance, protection against bodily injury and personal property damage for yourself and your passengers, roadside assistance, and an emergency sickness plan in case, well, you get sick.
Is it necessary to buy rental car insurance?
Any one of the rental car insurance plans mentioned above can significantly increase the cost of a car rental. Before you spend the money, keep a few things in mind. First, the State of California expects all drivers to meet minimum requirements for bodily injury insurance and property liability insurance. Second, it’s a good idea to carry more than the minimum amount of insurance to limit risk in the event of a collision. So it’s necessary to buy car insurance. But it’s not necessary to buy expensive rental car insurance.
Why not? You might already have the coverage you need from an existing insurance policy or the benefits that come with one of your credit cards. And, if you want specialty rental car coverage that’s not included in any of your existing policies, you can also search online for third-party insurance from companies that provide the same specialty car rental protection and coverage at a much lower cost.
Can I drive a rental car with my insurance?
It’s one thing to read this post in the comfort of your home and recognize that rental companies profit off their customers’ fears almost every time they sell one of their specialty insurance products. It’s another to stand at the rental counter, consider all the scary things that can happen when you get behind the wheel, and sign a form that says you’re declining coverage meant to give you peace of mind.
If you’re wondering whether you’re even allowed to cover a rental car with your own insurance, you are. Don’t take our word for it, either. Check in with your insurance carrier. Many carriers have information online about using your existing insurance for rental cars, and they have customer service representatives who can quickly tell you about the terms and benefits of your coverage.
You can drive a rental car with insurance that’s automatically included with many major credit cards too. Visa, MasterCard, and American Express all provide information online and over the phone about the coverage they offer and how to file a claim, if necessary. The knock on these types of coverage is they provide secondary coverage, meaning they take effect only after you’ve used up all your primary coverage from auto insurance or another relevant policy. But some credit cards include primary insurance as a benefit to their customers. Too see some examples, search online for primary car rental insurance.
Carshare and rideshare insurance
Consumers who don’t want to rent a dedicated vehicle at daily or weekly rates can use on-demand carshare services, like Turo and Getaround. They can also stay out of the driver’s seat altogether using rideshare services, like Uber and Lyft. The good news is that you won’t have to visit the dreaded car rental counter, where an agent may try to manipulate your emotions. Even so, it’s important to find out about your insurance options.
Turo and Getaround offer $1 million of liability insurance to cover the cost of third-party injuries or property damage if you cause a collision while using their services. Have a close look at the terms and conditions because, as some consumer websites have noted, not all $1 million policies are created equal. Turo also provides two types of supplemental protection for an additional fee. The company advises consumers to keep in mind that credit card companies “are highly unlikely to provide any coverage for a Turo trip, and some insurance companies may exclude coverage for carsharing.” Getaround, in an unofficial summary of its insurance policy, tells consumers it will charge fees of $1,000 to $2,500 for any vehicle loss or damage, or any personal property or bodily injury claim, “due to any cause regardless of fault.”
Insurance for rideshare services is highly nuanced with coverage that varies based on when the driver turns on the ride-sharing app, accepts a passenger request, and picks up the passenger. Until recently, private insurance options have been especially limited for drivers during that first period before they accept a passenger request. Rideshare companies took the position that a driver’s personal insurance provided coverage during this period, but many insurance carriers were refusing coverage for drivers engaged in ride sharing.
A state law known as AB 2293 addressed the problem by requiring rideshare services to provide liability insurance at all times. Shortly before the new law took effect, two carriers, Metromile and Farmers Specialty Insurance Co., started offering coverage specifically for rideshare drivers. Seven more carriers have since introduced rideshare driver policies, according to a recent update from the California Department of Insurance. Terms and benefits vary from carrier to carrier and from driver to driver.
If you’re home in the early evening on October 31, chances are a group of children will come knocking at your door yowling, Trick or Treat! What they really want is a treat, something that will bring them a little bit of pleasure. That’s the same thing consumers want when they go to the car rental counter or open the car-sharing app or ridesharing app on their phones. Nobody wants to be tricked into buying some kind of insurance for fear of what might happen if they don’t.
Have you had a memorable experience with car rental insurance? Do you have suggestions on how to protect yourself against scare tactics, or a genuinely scary situation? Please leave us a comment on our blog or on one of our social media pages.