Greetings from Granada, Spain!  Kim and I are having a great time in our favorite country to visit.  The people, the weather, and the food have all been fabulous.  Since we are traveling with four people and want a flexible schedule, we decided to rent a car rather than relying on public transportation.  The downsides have been that I am not used to driving with a ton of pedestrians, strange intersections, and impossibly tight parking garages.  With the freedom of having your own car comes the responsibility you have assumed for someone else´s property.  In today´s post, I am going to cover the basics of insuring your rental vehicle while outside of the U.S.

Liability Insurance

The most important type of insurance is liability insurance.  This covers other people´s property and injuries.  I am not nearly as concerned about damaging a $30,000 rental car as I am about accidentally killing someone else in a car accident in a country where I am not familiar with the laws.  Before renting a car overseas, you need to understand what you are going to do for liability insurance.  My rental car company´s website says that for no additional charge, my rental vehicle has “civil liability and bail with unlimited guarantees.”  The basic rental does not cover damage to the vehicle I rented, my personal stuff, and occupants in my vehicle.

This is very common in Europe as most countries require car hire services to include liability insurance with each rental.  I have rented from a different company in the past that said they would not cover my liability in the event that they found my accident happened while breaking a law.  I did not like seeing that language in the contract because it provides the rental company a way to weasel out of paying if they think I was speeding or accidentally ran a stop light.

You can further protect yourself from liability in a foreign country by getting an umbrella policy with the right insurance company.  USLI, Pure, and Safeco are some of the companies that offer worldwide liability protection on their umbrella policies.  Many umbrella policies don´t cover you from liability outside of the United States.  I feel better knowing that I have a second layer of protection in place while overseas.

Insuring the Rental Car

While almost all U.S auto policies will cover damage to the vehicle you are renting inside the United States, most of them do not cover your rental car overseas.  I like my coverage with Safeco that covers damage to worldwide rental cars (my umbrella policy covers the liability).  If you are one of the many who don´t have coverage, you have four options to insure the vehicle.

The first is buying the collision damage waiver, CDW, from the rental agency.  This option is overpriced, but it is likely the easiest to deal with in the event you damage the vehicle.  I was offered coverage for about $14 per day with a €2,000 deductible.  For more money, I could get the deductible lower and protect our luggage from theft.  People who are not price sensitive or want the piece of mind of not having to worry about their vehicle and claims may choose to pay the high fees for this insurance.

The second option you have to cover the rental vehicle is to rent it with a credit card that has worldwide rental insurance as a benefit.  Below is information about the coverage I have through my Citi American Airlines credit card.  You can see that although my vehicle is covered for up to $50,000, I would have to pay for the lost income the rental car company wouldn´t receive while my vehicle was being repaired and possible diminished value.

Using your credit card for coverage to your rental vehicle is the cheapest option because it is already included in your card benefits.  Most cards require you to decline the rental car´s liability insurance completely.  Your card will be billed for the damages to the vehicle and you will need to work with your credit card to get reimbursed, which will probably be a hassle.

I handed the high pressure rental car agent a copy of the sheet below and had no problems declining the CDW offered to me.  A few countries, like Italy and Ireland, will not allow you to waive the CDW.  I have heard that some rental agencies will require you to have a letter in order to waive the CDW.

Here is the coverage provided by my credit card.

The third option you have to insure your rental vehicle is to buy insurance from a third-party.  I went to www.insuremyrentalcar.com and received the following quote for my 11 day car rental.  The economy policy works out to be only $10.63 per day and is comparable to insurance that could be $30 per day.  There is no deductible and it is not available for residents of every state and you must sign up at least one day in advance.

The fourth way to insure your rental car overseas is to add coverage to your trip insurance.  If you buy travel insurance, inquire if this is an option for you and compare the costs and benefits to options above.

While it is a lot more fun to spend time planning a trip to the Alhambra or deciding where to get Tapas next, you also need to spend some time to find the right coverage on your rental car.  You don´t want to waste money or leave yourself exposed to unnecessary financial risks.