Do you always check “decline coverage” on the contract to rent a car? You have comprehensive and collision coverage on your personal vehicle – that coverage would transfer to the vehicle you rent. And, your credit card offers some protection for damage to a rental car. You don’t need to pay the additional cost to add Damage Waiver, Personal Accident Insurance, Personal Effects Coverage and Supplemental Liability Protection. Right?

Recently, I rented a car while I was on vacation. Unfortunately, I backed into a post and did $1,000 damage to the car. My auto insurance policy paid the cost to repair the car and my credit card company paid my deductible. I thought the claim was settled. A couple weeks later, I received a bill for administrative fees and “loss of use” for the car I had damaged totaling more than $300. That was considerably more than I paid to rent the car. Surprised, I looked at my rental contract. The fine print on the back of the agreement said they could charge me for those fees. Also, I could be charged for “diminishment of value” because the car was involved in an accident. You should know the limitations of your own car insurance and credit card insurance and what is covered when you purchase the rental car companies’ insurance.

Car rental companies think insurance companies should pay for more damages than they do. Credit card companies ask for more documentation than the rental car companies are willing to supply. Some states have stringent consumer-protection policies for rental car fees – other states do not. The person renting the car gets caught in the middle and is responsible for paying the bill.

If you waive collision coverage and your rental car is stolen or damaged, your fault or not, the claim is sent to a damage-recovery company, a collection agency or a claim department. The fees assessed are based on their policies, state laws and the rental car agreement. Some of the fees are self-explanatory, like towing and storage, and some are mysterious. Loss of use is a fee charged for each day the rental car company can’t rent the missing or damaged vehicle. It could be the same daily rate you paid to rent the car. Administrative fees could be staff time to submit a claim, accident reconstruction or vehicle valuation after an accident. Fees will be higher if the accident results in extensive damage. Some rental contracts tell you how the fee will be determined; most do not. Diminution of value fee is the loss of value of the car that is damaged. These fees generally apply if the damage is $2,500 or higher but each rental company has a different rule.

Your personal auto policy will usually extend to your rental car. It’s always a good idea to verify coverage with your agent. If you don’t carry comprehensive and collision coverage on your vehicles, that coverage won’t extend to a rental car.

Supplemental liability insurance provides coverage for the other person involved in the accident. If you own personal vehicles, your liability coverage should transfer to a rental car. You may want to purchase this coverage if you carry minimum limits of liability.

Personal accident insurance provides you and your passengers some coverage for medical expenses, ambulance ride and accidental death payment similar to life insurance. Personal effects coverage applies to personal belongings of the person renting the car and a family member travelling with the renter.

Purchasing all of this additional coverage could cost from $18 to $33 per day. Is it worth it? Considering all the possible fees you could be charged in the event of an accident, even if it’s not your fault, you should consider collision damage waiver or loss damage waiver.

Your nonprofit organization may carry hired and non-owned auto coverage. Generally, that is liability coverage only. It may be possible to add physical damage coverage for a non-owned car.

Before you rent your next car, carefully review the coverage you have in place and decide if you should purchase any of the supplements offered by the car rental company.

At Colorado Nonprofit Insurance Agency, our insurance programs offer a wide range of competitively priced liability packages. Remember, profits earned by Colorado Nonprofit Insurance Agency are used to support Colorado Nonprofit Association programs. Please contact us when you are purchasing insurance for your organization. You can reach us via phone at 303-894-0298 or toll-free at 866-537-1142.