I was talking to a friend of mine who is the manager of car rental franchise in Mexico. I happen to know her for many years and I was surprised to hear that every time she travels to the US or, anywhere for that matter, and rents a car she always buys all the insurance being offered. Why do you that? I asked. And her response was: “I don’t want any problems whatsoever and paying a few extra dollars is worth it in this case because it gives me peace of mind and lets me enjoy and concentrate on the reason for my trip”, which in her case is shopping and as we all know that is a very involved affair that needs all your concentration and bargain-hunting abilities.
Now, my friend has been in the car rental business for many years, longer than I know her, and I don’t think that she has ever worked anywhere else but the car rental industry, so she knows the business inside out, and she is savvy about spending her money, so it seems to me as solid and powerful an argument for buying car insurance from the rental company as you are going to find.
Of course, there are many ways to be protected, if not from accidents to happen, at least from the expense involved… you can use your own policy which is likely to cover, at least in part, the cost you may have to incur, and at times it does not include all, or you can buy special insurance before your trip, or you can rely on the insurance that may come with the use of a credit card, and so on. However, if you just want to the least amount of problems than buying the coverage at the rental counter is the way to go. With any insurance policy you will be required to fill out forms and possibly follow up with calls, etc. Good luck trying to make effective the coverage offered by the credit card as it may take some doing. With the coverage purchased at the counter you may have to complete an accident report and, in all likelihood, you’ll never hear anything else about it. That has been what I have seen, in most cases anyway. You simply walk away.
Now if you are renting in a foreign country, then the choice becomes clearer because if you do not purchase the coverage and are involved in accident – something much more likely to happen since you are in unfamiliar territory – you will be required to pay for any damage immediately, regardless of any insurance coverage you may have. The car rental company is not likely to let you walk away with a promise of payment from your insurance, and this can lead to a most uncomfortable situation, as you can imagine.
There is another factor seldom considered, which is loss of revenue, defined as the revenue lost while the car is unavailable for rental. I see this more clearly in the following example. I am ABC Car Rental and I have a fleet of ONE car which is rented to you. You are involved in an accident which requires the car to be repaired and be out of service for a month. You will cover all the repairs, you say, so I shouldn’t worry. But I do worry because I am not able to rent the car for a month and where will I get the revenue to pay the rent, and other expenses. That is loss of revenue. I am not sure whether all insurance companies cover this risk or not, but for sure credit card coverage does not.
If you happen to incur an accident you will have to file an insurance claim with your insurance company which may cause your premiums to rise and thus wipe out any savings realized by not purchasing coverage at the rental counter.