Does your insurance cover car rentals?

In order to rent a vehicle in another country, you will only need a few things. The first is a credit card, as almost all major vehicle rental companies will not rent you one without a valid credit card.

The second thing you absolutely must have is a valid driver's license. The reason for this is not because the rental agencies demand it, but because almost all countries require a valid permit in order to operate a motor vehicle. If you are caught without a valid permit you could be facing steep fines and even jail time.

One thing to be aware of here is that some rental agencies in some countries may accept a Hong Kong driver's license as it is - you just show the agency your license and will be able to rent the vehicle. However, if you are renting a car in a country where Chinese or English is not the main language, you will likely be required to show an International Driver's Permit, or IDP. This is essentially a piece of paper that acts as a translation of your driver's license, stating that it is, in fact, valid.

Many of our staff have rented vehicles in other countries and, in their experience, would highly recommend that if you are considering renting a vehicle outside of Hong Kong, you have an IDP. Luckily, the process of receiving an IDP is simple. If you have a license issued in Hong Kong, just download form TD51 from the Transport Department's website and follow the information on the form.

Should your license be issued in another country, you are going to need to get the IDP from there. It is important to note that if you have an IDP, this does not replace your driver's license. You will be required to show both the IDP and your original license to rent a vehicle. 

In some countries, car insurance providers will extend coverage to rental cars if you secure a comprehensive plan. For example, if you are in the US, a comprehensive car insurance plan will usually cover cars rented anywhere in the US, while some will even cover cars rented in Canada or Mexico. In Hong Kong, however, this is not the case.

If you already have car insurance for your vehicle in Hong Kong and go to rent a car in another country, you are going to need to secure insurance in that country.   

The vast majority of car rental agencies offer four types of insurance:

• Collision Damage Waiver - Commonly listed as CDW, LDW, or DW, this is a form of insurance called a waiver. Its main purpose is to ensure that, should you be in an accident, the rental company will not be able to go after you personally for losses. The price of this waiver can vary immensely, but it is usually the most expensive piece of insurance. As with your normal car insurance, there are also exclusions included, for example, this will not cover you if you were drunk at the time of the accident, or drive the vehicle outside of the designated area e.g., another country from which you rented.

• Liability - This insurance will cover any damage done to third parties (not the rental vehicle), including both property and medical, should you be in an accident.

• Personal injury - This insurance is designed to provide the driver and passengers in the vehicle coverage should you be injured in an accident that is not your fault.

• Personal property - This insurance is designed to provide coverage for lost or stolen items that were in your vehicle. It is important to note here that if you park in a lot with warning signs saying not to leave valuables in your car, there is a good chance any items stolen will not be covered.

When you rent a vehicle, you will usually be asked whether you want to take out CDW and any of the other forms of insurance. We highly recommend you take out CDW at the very least and consider the other types of insurance. For example, if you already have health insurance and home insurance that covers your property, then personal injury and property insurance likely won't be necessary.

Liability insurance would also be a good idea, as almost every country in the world requires you to have at least third-party liability insurance when driving.

In some states in the US and other countries, it is common for rental agencies to push other types of insurance, such as hail damage or windshield damage insurance. The reason for this is because many insurance plans don't actually cover this type of damage. It would be a good idea to research the weather in the areas you will be driving. If you will only be driving for a short period of time, the weather looks to be good, and you will be parking in an enclosed garage, then these extra forms of insurance are unnecessary.

These days the vast majority of people will book their rental car ahead of time online. It is important to pay attention to the price, as some car rental agencies will only quote the price of the car, without insurance, while others will quote with some form of insurance included. This means that a cheap rental car may quickly double, or even triple in price at a moment's notice.

Beyond that, when you do rent your car, it is important that you read all the insurance documentation that is included with your rental agreement. You may find that there is a low limit on claims, which means if you are in a serious accident and there is excess (damages over the claim limit) you will be liable to pay out of pocket for a large part of the damage. Rental agreements will also spell out coverage exclusions including the usual drunk and distracted driving, but you should also pay attention to the agreement as it is widely known in Canada and the US that any damage sustained to the vehicle while you are not on a paved road (e.g,. A dirt or gravel road) will also not be covered.

Circling back to excess, there are actually travel insurance plans available in Hong Kong that will cover rental car damage if there is an excess. These plans may not be as affordable as others on the market, but the extra car insurance coverage could be a good idea, especially if you are going to be driving in an unfamiliar country.   

If you are looking to learn more about car insurance, contact the experts at Kwiksure today.