Why Rental Car Insurance Isn’t a Good Deal

Tim Harford explains in Slate why you shouldn’t opt to pay for rental car insurance.

And that’s without even seeming to realize that most credit card products bundle rental car insurance at no marginal cost.

My Diners Club card offers primary insurance. Almost any premium Visa, Mastercard, or American Express will at least cover the costs your insurance company does not, such as the $900 deductible Harford references in the article.

Several cards whose coverage is generally secondary provide primary coverage when the driver is not otherwise insured.

Check the fine print or call your credit card company to find out.

People aren’t just paying too much for something. They’re paying too much to buy something they already have.

(Hat tip to Marginal Revolution.)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The other issue he doesn’t address is the value of time. For a $90 cell phone with no insurance, replacement after a loss is as simple as walking into a store and plunking down $90; done. With insurance, there are police reports to file and forward to the insurance company, adjustors to talk to, paperwork, paperwork, and more paperwork. And in the meantime you probably had to front the $90 anyway in order to get a new phone quickly. For anything short of a major loss, the value of one’s time spent collecting a payout (even on a low income) further offsets the benefit of insurance.

  2. This article is silly. It only addresses collision insurance, which most cards carry. It doesn’t address liability insurance, (ie. when you crash into someone, not something). Most cards that I know of, do not offer liability insurance for car rentals. That is a payout that could be in the millions, and that is a big risk.

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