How is Auto Insurance Covered if I Rent a Vehicle in Another Country?
Auto insurance, unfortunately, is not a one-car-fits-all sort of product. Nor is it a one-country-fits-all sort of product. Combining the variables of rental cars and international destinations can get a bit complicated for drivers who are trying to cover all their insurance bases while spending as little as possible.
When drivers want to insure a rental car in a foreign country, there are a few ways in which they can do so. Let's examine those options.
Adding Onto an Existing Policy
This is a possibility that drivers should consider when deciding how to insure a rental car abroad. Based on how companies structure their policies, turning to a domestic insurer for international coverage could end up being the best possible option.
While the likelihood of that happening isn't huge, it's at least possible. Some Canadian companies will offer a rider (the insurance kind, not the passenger kind!) for rental cars in the United States or Mexico that extends normal coverage to those places. When that’s the case, it's often a lot cheaper than buying insurance from the rental company.
Things get more complicated for destinations outside of North America, since it's rare for a driver's domestic insurer to offer that same rider for places where driving situations could be completely different (e.g. driving on the other side of the road, different dimensions, etc.).
Taking Advantage of a Credit Card
Not all card owners realize it, but having certain credit cards can be hugely beneficial for renting and insuring a car internationally. Since the two things sort of go hand in hand—people typically pay for rentals with credit cards, travel cards are a big sell for credit card companies, etc.—it's easy to see why there would be perks associated with them.
Rental car discounts vary from card to card, but it's likely that the value of the discount will be proportional to how much of a premium card is being used. The range could be anywhere from a full discount (or at least, a full one when supplemented with earned rewards points) to something small like five per cent off, which, in the latter case, would call for the rest of the rental and insurance to be covered in a different manner. It's also important to keep in mind that discounts may only extend to certain rental companies that the credit card provider has partnered with; or that the vehicle selection could be restricted.
Incorporating it Into a Travel Insurance Policy
Just as adding rental insurance coverage into an existing auto policy is a nice way to avoid starting up an entirely new purchase, so too is adding it into the travel insurance policy that is being used during those travels. It also consolidates contacts into one place, so that in the event of a car-related emergency, travelers don't have to be going back and forth between multiple companies.
The extent to which a travel insurer is willing to extend rental insurance coverage—or the amount that they automatically do—can differ from company to company. It may also have certain exclusions, especially on alternative vehicles such as motorcycles, RVs, ATVs, etc. But it's always a good idea to check how insurers treat this sort of an add-on.
Buying From the Rental Agency
This tends to be one of the more expensive methods of insuring a rental car abroad, but it's certainly viable—and sometimes unavoidable. When travelers have already left home, having locked in all their policies, and spontaneously decide to rent a car in another country, getting insurance from the rental agency can often be the simplest way to do it. And under the right circumstances, drivers can even combine this method with a credit card discount.
When buying insurance directly from a rental agency, it's generally encouraged to get theft protection and a collision damage waiver (CDW). A CDW waives the rental agency's right to collect a super high deductible in the event of a collision. It can be a bit pricey sometimes (between $10-$30 per day, usually), but is worth it to mitigate the risk, which increases on unfamiliar roads.