7 car rental insurance mistakes and how to avoid them

Renting a car while on a trip is one of the best ways to explore a new country and a great alternative to booking expensive tours. But if you're not careful, the cost of renting a car can easily add up. Here's 7 mistakes to avoid when booking your next road trip.

Mistake #1: Renting a non-insurance friendly car.

When renting a car, most of us make the mistake of renting an expensive and luxurious car to make our trip a little bit more special. What we don’t realize is that when we do this, we increase the overall cost for our trip in terms of insurance, cost of the rental car, cost of recovering from a damage and the list goes on.

When you rent a car, make sure that the car is insurance-friendly.

• Tempting as it may be, avoid picking expensive cars or sports cars as your rental car. This is because the cost of your collision coverage will rise with the value of the vehicle.
• Choose a car with plenty of safety features. Get a list of safety equipment that can reduce the insurance premium. Some examples include a security system, front and rear airbags and antilock brakes.
• Book the smallest car that you possibly can without making your trip uncomfortable.

Mistake #2: Picking up and dropping off the rental car at the airport.

Most rental car companies charge an additional fee on the base rate of the car if the pickup and drop-off is at the airport. It’s usually referred to as “premium location fees” or “airport surcharge”. Also, cost per day of rental cars is relatively higher when renting from the airport.

If you’re taking a flight to another city/country, use public transport to get to one of the other branches of the rental car company away from the airport. For e.g. cost of renting a car at the airport is on average $82/day. This fare includes an airport surcharge. On the other hand, renting a car in the city costs $37/day on average.

Mistake #3: Purchasing Insurance offered at the rental desk.

Rental insurance is probably the most complicated part of renting a car, which is one of the reasons why most of us shy away from exploring our options and settle for the insurance being offered at the car rental desk.

We think that we are saving ourselves from the pain of the insurance world, reducing our deposit amount and now protecting us in case an accident occurs during our trip. Well, that's only partially correct!

Insurance is one of the most important income streams for some rental car companies and most of them take advantage of the opaqueness of the insurance world. Their insurance can have a lot of exclusions, can be expensive and also may include a lot of hidden fees should you need to file a claim with them.

Third party insurance is often cheaper and may cover you for more than the insurance provided at the rental desk or the travel insurance included in your credit card. Such insurance, starting from $12*/day, covers most of the common exclusions in rental desk insurance, like windscreens, tires, car rental administration fees etc.

*$12/day everywhere except New York, which is $9/day

Mistake #4: Buying more insurance than you need.

Often you need to buy multiple insurance policies to cover yourself for various different things - collision damage waiver, roadside assistance, third party liability etc.

Don’t buy insurance that covers you against water damages when you know there’s no way that your car can get damaged by water/floods etc. Also, look for insurance providers that have everything included in one single product. RentalCover.com offers different products to best suit you.

Mistake #5: Ignoring the 24-hour clock.

Third-party providers often sell insurance based on calendar days whereas rental car companies offer insurance based on 24-hour periods. One of the few things that you’d need to watch out for is the 24-hour clock when it comes to third-party insurance coverage purchases.

For eg. avoid booking cars from 20th February 9:00 am to 24th February 9:00 am. If you do this, you’ll get charged for 5 days worth of insurance for 4 days of car rental.

Instead, find a car rental company that includes and allows late drop-offs and book a car based on calendar days. For eg. book a car from 20th February 9:00 am to 23rd February 10:00 pm.

Mistake #6: Buying expensive policies.

It’s human nature. We tend to think that expensive things are better. Which is why you will find yourself questioning yourself whether you should purchase the unnecessarily expensive “Super Cover”.

Instead opt for cheaper third-party insurance that doesn’t try to hard-sell upper levels of their products and preferably cover you for the bond that the rental company deducts. .

Mistake #7: Forgetting that you should have the option to opt out at any time.

Most car rental companies and insurance companies offer insurance in a way that locks you in, meaning they charge a cancellation fee if you decide to cancel their insurance. Chances are, you won’t realise this when purchasing insurance with them but it’s something you should be mindful of.

Find an insurance company that doesn’t charge cancellation fees or deduct any money if and when you choose to cancel.