The least straightforward transaction in planning a European trip is renting a car. It is also, as you will soon see, the most perilous in its potential for financial loss. When booking a hotel, an apartment, an airline ticket, or even a river cruise, the total costs are pretty much out there in plain sight.

While the term “hidden charges” may be a bit of an over-statement when used in reference to renting a car in Europe, the rental car online shopper may have to do a deep drill-down at websites like Expedia.com and Rentalcars.com to find exactly what is and is not included in the rental price. Information on cancellation policy, travel restrictions, cross-border fees, local charges assessed at the rental desk, and most important, insurance, is also less than prominently displayed.GermanHighway

Renting a car is unique among travel transactions in that the renter is entrusted with an asset worth from $18,000 to $100,000 and the rental company demands their asset be returned with no diminution in value. Bringing the car back undamaged is the responsibility of the renter. While we all realize car rental insurance is essential, how to make sure we have the best coverage at the best price is not so obvious.

The following short primer on car rental insurance assumes rental of a car in EU countries except for Italy and Ireland. (We’ll talk about them later.)

Liability Insurance

What if I have an accident and damage another car or person not in my car? This one is easy. By law, all EU rental companies must carry many millions of euros in liability coverage. It is not left to the discretion of the renter whether or not to carry third-party liability insurance. It is responsibility of the rental company.

Collision (CDW) & Theft Insurance

Since the renter is responsible for the rental car, it is essential to have CDW (collision damage waiver) or LDW (loss damage waiver—includes both theft and collision). Most rental car sellers that market to North American travelers quote rates that don’t include CDW/theft, thereby leaving that insurance decision to the renter. Even so, it is unlikely a rental company will allow a customer to drive away without this coverage.

There are three ways to obtain CDW/theft insurance:

  • Buy it from the rental company. It will be expensive (€10-€40 per day), will come with a deductible or “excess” of from €600 to €3000, and may not cover some items on the car such as wheels, glass, lamps, side mirrors, interior, undercarriage and roof. The rental company will happily sell you even more coverage—called Super CDW—to reduce the deductible and/or include car parts not covered by their regular CDW.
  • Third-Party insurance companies. Travel insurance companies such as Travel Insured and Travel Guard will sell CDW/theft for about $10 per rental day to customers who also purchase regular trip insurance. Usually carries a deductible of about $250.
  • Rely on your credit card. Most credit cards provide free, zero-deductible CDW/theft. Virtually every consumer protection organization recommends this as the best coverage option. For the insurance to be valid you must pay for everything on the rental agreement with the credit card and submit your claim for damage or loss within a specified time period. Check with your card to see if your account is covered. The card must be in the name of the principal driver and coverage includes all additional drivers shown on the rental agreement.

Most credit cards limit coverage to vehicles with an MSRP (manufacturer’s suggested retail price) of $50,000 and won’t cover rentals longer than 31 days, or vehicles with more than seven seats. For a small, per rental fee American Express offers most cardholders their Premium Car Rental Protection that covers rentals up to 42 days, vehicles with as many as nine seats, and cars with MSRP of up to $100,000.

Credit cards usually provide “secondary” coverage, meaning they provide no coverage at all if the renter has other insurance. While your own car insurance may cover car rentals in the U.S., it won’t in Europe. Secondary coverage is enough in most cases, but if you buy insurance from the rental company it means your credit card steps out of the picture making you subject to the rental car company’s insurance terms, with its exclusions and high deductible. A few cards, however, such as Amex with Premium Protection, provide primary coverage and will payoff regardless of the presence of other insurance.

It’s probably safest to stick to the top-tier, multi-national companies such as Hertz, Avis, and Europcar. Smaller suppliers may quote prices that include CDW/theft, then sell you expensive Super CDW at the rental counter. Others, such as Dollar and Thrifty, may have attractive prices, but won’t allow customers to decline CDW and theft insurance unless payment is made with specific credit cards. At Thrifty’s website you must click a small-print link at the bottom of the booking page to see this.

Customers with credit cards must take LDW and TP unless at the start of the rental they provide (i) US or Canadian issued Gold/Platinum MasterCard or Gold/Platinum Visa card and (ii) written proof issued by the credit card’s insurance company that the card has full coverage for Germany or worldwide at time of rental or (iii) American Express Platinum/Centurion (no Gold) card.

The Moment of Truth

This brings us to the rental counter issue. Though you may arrive with a reservation that allows you decline CDW or theft insurance (LDW, TP), be prepared for a sales pitch. Rental counter agents are paid commissions to sell insurance. “Mr. Jones, do you realize you are responsible for the full value of the vehicle should you be involved in an accident?” and the threatening but meaningless “If you decline our offer of insurance we will consider you as uninsured.” Unfortunately, this tactic sometimes works and renters buy insurance they don’t need or want.

More than occasionally there is a “misunderstanding” and the customer unwittingly signs a rental agreement (RA) that calls for insurance. Though major, multinational rental car companies don’t cheat customers, they seem more than willing to embrace high-pressure sales tactics at the rental counter.

Contributing to the “misunderstandings” are rental agreements signed in a foreign language (though major companies claim a copy in English can be made available), and the practice of customer initials to confirm acceptance of optional insurance on the rental agreement has mostly gone by the wayside in Europe. Though the rental agreement almost always clearly displays additional charges, jet-lagged travelers eager to be on their way sometimes don’t examine what they sign.

We are aware of two recent instances of travelers at major German airports signing for approximately $1,000 worth of insurance on rentals that cost less than $350. Both were veteran European auto travelers with more than a dozen past rentals in which they had declined CDW/theft. Though both signed the RA, is it ethical for a rental company to fail to verbally draw the customer’s attention to the charge she/he is about to accept…especially when that cost is approximately three times the cost of the rental car?

So how do you protect yourself when it comes time to sign that binding rental agreement?

  • Carry a letter from your credit card company certifying you are covered for car rental collision and theft insurance in Europe.
  • Request a copy of the rental contract in English.
  • Record the rental counter transaction with a smartphone or tablet. You will then have evidence of your intent to decline optional insurance.
  • Write and initial “I hereby decline optional insurance” above your signature on the rental agreement.
  • Instead of renting through a rental company or an online travel seller, book with a broker or agency that offers 24/7 English-speaking, toll-free-from-Europe, phone support that, when things go wrong, can speak on your behalf with supervisory personnel at the rental company.

Earlier it was mentioned that car rental insurance works a bit differently in Italy and Ireland. It’s not possible to rent car in Italy without purchasing CDW and theft insurance from the rental company. It’s always included in the quoted price. Credit cards—with one limited exception—simply don’t offer coverage in Italy. Rental company CDW and theft, however, usually carries a deductible/excess of €1000 to €3000. You can request that your pre-paid rental include zero-deductible insurance or you can purchase the coverage at the rental counter. A better solution is to rely on a Visa credit card that reimburses for damage up to the deductible amount. In other words if the deductible is €10000 and your damage is €1500, Visa covers the first €1,000 and the rental company takes care of the remaining €500. Check with Visa to make sure your account offers this coverage.

Rental companies in Ireland allow CDW and theft to be declined only if payment is made with certain credit cards. You need to know if your card is one of the approved ones. Also required is a letter from the credit card company that certifies coverage. Even with the right credit card, declining the offer of insurance in Ireland may result in additional charges at the rental counter and cause a security hold as large as €5000 to be placed on the card, thereby lowering its credit limit by that amount.

Provided it covers CDW and theft insurance, your credit card offers the best coverage. Don’t let anybody tell you otherwise…especially at the rental counter.

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