Your summer vacation may well include renting a car: From a day excursion to an extended road trip, there are some attractions and activities that demand a car. If so, you need to consider some key details.
1. Which car? I won’t get into specific brands or models, but if there are more than two full-size adults or large teenagers in your travel party make sure any car you rent has plenty of room in the back seat. These days, even many so-called family sedans have very little back seat room. This year, the good news is that the rental companies have a lot of SUVs on offer at good rates, so look there first for relief.
Electrics pose a problem. To date, rental companies have been very cautious about ordering electrics for their fleets. They’re rare and expensive. I don’t see any clear trends yet, but for now, if you want electric, you'll pay a premium.
- Buy a full tank of gas and return the car with whatever amount you have at the end of the rental.
- Return the car with whatever you have in the tank and have the rental company refill it—at a stiff premium price
- Rent the car with a full tank and return it full.
3. Insurance. Whenever you rent a car, you must have two types of insurance: liability insurance that covers your liability for damage you might do to another person or someone else’s property while you’re driving, and collision insurance that covers your liability for damage done to your rental car while you’re renting it.
Liability. Whenever you get behind the wheel of any car, you need liability insurance. Your regular automobile insurance probably covers you for liability in a rented car. If it doesn’t, you may need to buy the rental company’s offer, but a better option is to call your insurance agent for adequate year-round coverage.
Collision. Whether to buy the rental company’s collision deal has been a major point of contention for years. Fortunately, you have options.
Rental company CDW “collision insurance” really isn’t insurance. Instead, it’s an agreement by the rental company to waive your obligation for damage or loss, subject to a few exclusions. Although vastly overpriced, mostly north of $20 a day, CDW has the advantage that in most cases it gets you off the hook fully and immediately—you just return the damaged car, hand over the keys, and walk away.
Your regular auto insurance may cover rental car damage under collision provisions, which usually entail a deductible. But putting a big rental car damage bill on your regular policy may hike your annual policy cost. Also, if you drive an older car, the maximum dollar limits on your policy may not be high enough to cover a newer, more expensive rental car. And a few personal policies cover rental cars only when you rent a replacement while your personal car is being repaired. Be sure to check before relying on personal auto coverage.
Many credit cards offer “free rental car collision protection” as a benefit, but there are gotchas. Most card coverage is secondary, meaning you must first claim the maximum payment you can from your regular insurance; the credit card covers only the difference. Another gotcha is that a few big card issuing banks—most notably Citi—have quietly stripped most cards of even secondary coverage.
A few cards offer primary coverage—the card pays the entire bill, up front, and you don’t have to file a claim on your auto policy. Chase Bank offers the most options, including cobrands with United Airlines, but Capital One, US Bank, and Bilt issue a few. Clearly, this is your best option if available.
If all else fails, if you rent through an OTA, chances are it sells collision coverage for about half the rental company’s CDW rate.
