When can I skip the pricey insurance at the rental car counter?

We’re spending a week skiing in Lake Louise over the holidays, so we’re flying to Calgary and renting a car at the airport. I’m already spending more on this trip than I’d like, so I’m wondering: can I skip the $40-a-day insurance they offer at the rental counter? – Jin, Toronto

That 40 bucks a day might seem like a lot, but it’s cheaper than paying for a totalled Ford Escape.

But before you buy the coverage at the rental counter, check to see what’s already covered by your credit card and your car insurance, experts said. And even if you don’t have coverage, there are cheaper ways to get it than by buying when you pick up the car.

“Start by asking: ‘Do I have any coverage already?’” said Matt Hands, vice-president of insurance at Ratehub.ca, a financial comparison site. “You should really understand exactly what you have – and what you don’t have.”

At the rental counter, you’ll usually be offered the collision damage waiver (CDW), also known as a loss damage waiver.

It covers the cost to repair or replace the rental car. It’s called a waiver because the rental company is waiving the cost for repairing or replacing the car. Typically, it costs around $35 to $40 a day.

“If there’s a scratch, if you get in an accident, then there’s coverage for the vehicle,” Hands said.

If you turn it down, the rental company won’t ask for proof that you have any other insurance coverage of your own.

But unless you have other coverage, if the car is stolen or damaged in any way, you’re on the hook for the full cost to repair or replace the vehicle – even if you didn’t cause it.

“Sometimes customers mistakenly believe if they didn’t personally cause or witness any damage – for example, a hit-and-run incident in a parking lot, flooding or hail damage – that they are not responsible,” Michael Wilmering, a spokesman for Enterprise Mobility, which includes Enterprise, National and Alamo, said in an e-mail.

Typically, there’s no deductible. You also don’t need to file a claim. While the cost of the CDW can add up if you’re renting for longer than a few days, it offers hassle-free protection if anything does happen, Hands said. You hand over the keys when you bring the car back – if there is damage, it’s covered.

There are no other headaches. Even if there is no damage, it usually makes dropping off faster, he said.

“If I’m on a trip and I’m renting from the airport and I have a tight timeline getting to a flight, I like the ability to just say ‘Here are my keys, I need to go,’” Hands said. “I don’t want to be worried about paperwork and review.”

If you rent the car through a travel site, such as Expedia, you may be able to buy collision damage insurance for less than what you would pay at the rental counter.

We found offers for around $16 a day. But you must buy it when you book the rental – and you must turn down the rental company’s insurance.

Since it’s run by another insurance company and not by the car rental company, you will have to file a claim if your car is damaged or stolen.

Insurance assurance?

If you have car insurance, your policy might include coverage for cars you don’t own, including rental cars. But you may not have it – it’s optional coverage. Check with your broker or insurance company to make sure – and check how much damage it covers.

“It’s commonly referred to as a No. 27 endorsement,” said Rob de Pruis, the national director of consumer and industry relations for the Insurance Bureau of Canada. “It’s common to have a specific limit, for example: $50,000 maximum. If you go down to Las Vegas, for example, and rent one of these high-end luxury vehicles, it would likely be insufficient and you would need to get additional coverage [at the rental counter].”

The exact name of the endorsement varies by province. For instance, it’s an OPCF 27 in Ontario, SEF 27 in Alberta and QEF 27 in Quebec. The three provinces with government-owned insurance – British Columbia, Saskatchewan and Manitoba, have their own optional rental car coverage.

It’s only valid in Canada and the U.S. The cost varies, but typically it’s around $50 a year, de Pruis said.

Also, know how much deductible you’ll have to pay if you make a claim for a rental car on your insurance policy – it could be up to $1,000 or more.

If you have it, you don’t need to let your insurance company know that you’re renting a car – you automatically have coverage, de Pruis said.

If you don’t have it, you can usually add it any time.

Also, if you use your own insurance and have an at-fault collision, your rates could go up, Hands said.

“Just understand what coverage you have and understand your risk tolerance – what risk you are willing to take,” Hands said.

Take the credit?

Your credit card might automatically provide coverage for damage to a rental car – as long as you used it to pay for the car rental. You also must decline the rental company’s coverage.

But look at the fine print in your credit card agreement – not all credit cards cover rental cars, Hands said.

Even when they do, there’s usually a limit on the value of cars that they’ll cover. For example, for RBC’s World Elite Mastercard “any vehicle with a Manufacturer’s Suggested Retail Price (MSRP), excluding all taxes, over [$65,000] is not covered.”

Plus, certain types of vehicles, such as pick-up trucks and cargo vans, may not be covered. That’s why you need to do your homework, Hands said.

“And not every credit card works with every rental company,” he said. “Reach out to your credit card company and ask about the perks.”

Also, check to see which countries it covers, Hands said. You also typically need to report a collision to the credit card company within 24 to 48 hours.

With credit card coverage, you may face extra hassles co-ordinating between the rental company and the credit card’s insurance company to cover any damage. Often, you may be billed directly by the rental company and have to sort it out.

That’s why, if you’re travelling outside Canada and the U.S., Hands recommends just buying the CDW at the rental counter. “Whether it’s a Caribbean country, Europe or Asia, just buy the coverage they provide,” Hands said. “You don’t want to be getting yourself into a situation outside North America.”

Have a driving question? Send it to globedrive@globeandmail.com and put ‘Driving Concerns’ in your subject line. E-mails without the correct subject line may not be answered. Canada’s a big place, so let us know where you are so we can find the answer for your city and province.