Is Comprehensive Insurance for Rented Car Necessary?

Renting a car is a definite must for an overseas driving holiday. Often, we heard families and friends lament that road trips are expensive due to the high cost of renting a car.

Having been on road trip for almost 20 years, we have always felt puzzled with their comments until recently. We learnt that these friends have been paying for full insurance coverage for their car rental.

Renting with full insurance coverage can easily increase your rental cost by 30%! So, do we really need a comprehensive insurance when we rent a car? Let’s analyse.

Basic Insurance

Basic insurance is a compulsory insurance that is included in the rental cost. It covers third party claims and damages to the rented car. However, renters are required to pay a high amount of deductibles should damages occurred. For example, renting a Volkswagan Golf in Croatia with Hertz, the deductible payable is Euro 10,000. In addition, an excess of Euro 1,500 is payable.

This brings us to the next highly recommended “must-get” optional item to go with your rented car.

Theft Protection

Theft protection insurance is optional. In countries with high car theft, this insurance can be compulsory. Since it is not exceptionally costly, it may be worth it to pay for that peace of mind when driving in such countries.

Collision Damage Waiver

Collision damage waiver is a term used by Hertz. A different term is being used in other rental company. For example, Sixt calls it Loss Damage Waiver. But, they all mean the same thing.

It may add up your rental cost by 15% to 20% (depending on country). Nevertheless, it is totally necessary and worth it. This is one extra that we always pay for.

There are different level of waivers options available to renters. The various levels determine the amount of excess that the renter is liable. We have always opted for the lowest (therefore cheapest) level of waiver coverage.

In our above example, renter is only required to pay for the excess of Euro 1,500.

Super Coverage

Again, this is a term used by Hertz. Other car rental companies provide such coverage as well and different terms are used.

Super coverage simply mean full coverage or comprehensive insurance. Effectively, it means paying for the highest level of collision or loss damage waiver. In our above example, a renter pays nothing (not even the Euro 1,500).

As said earlier, opting for this level of coverage can easily increase your car rental cost by 30% or more. Take our example above, is it worth the extra dollar to cover the Euro 1,500 excess fully?

Travel Insurance 

Well, here’s a piece of lesser known information that will help you decide. Do you know that most travel insurance actually covers rental vehicle excess?

Different travel insurance plan provides different amount of coverage for rental vehicle excess.

If the rental vehicle excess coverage by your travel insurance is sufficient to cover your rented car excess; say Euro 1,500 in our example, then it make sense to just keep your collision/loss damage waiver to the basic. 

However, if the rental vehicle excess coverage is insufficient, the percentage covered becomes important. In our example, assuming only 80% of excess is covered, this leave us with Euro 300 to pay. If this amount is shared by many travellers, then the impact on each traveller will be small. Thus, purchasing full coverage may be unjustifiable.

Eventually, the decision to buy comprehensive insurance or not when renting a car is a number game to be balanced by individual traveller’s risk appetite.