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We’re flying to Newfoundland in September and renting a car there for three weeks. My husband and I aren’t sure if we should buy the expensive insurance they sell at the counter. I think we’re fine with our credit card’s insurance – it’s a fancy points card so I’m assuming it covers rental car insurance. But my husband thinks we should buy the extra insurance just to be safe. – Briana, Toronto

Before you charge off in a rental car without buying their insurance, check with your credit card company to make sure you’re covered.

“Not every card has collision and damage protection but most premium travel ones do,” says Matt Hands, senior business unit manager of insurance at Ratehub, a rate comparison site. “It’ll say in the pamphlet that came with the card, or you can call and actually ask somebody.”

Buying the insurance they sell at the rental counter can cost $35 (or more) per day, depending on what you get, and a lot of people just buy it to be safe – even though they may already be covered by credit cards or their car insurance, Hands says.

So what do rental car companies offer? It varies. Budget Canada, for instance, sells a collision damage waiver (CDW), personal effects and accident benefits insurance and liability insurance.

A CDW covers the damage to the rental car. Otherwise, you’re on the hook for it.

Accident benefits insurance covers death or dismemberment. Personal effects insurance covers personal items, like cameras or laptops, that may be damaged or stolen.

Liability insurance covers you if you cause injury or damage to property, including another vehicle, over the amount included in the rental agreement.

Canadian rental companies provide some liability coverage, but companies in other countries might not.

Typically, you’ll get the minimum amount of liability coverage required by the province – in Ontario, it’s $200,000 – included in the rental price. At the counter, you can buy more.

Check your wallet

Your credit card may include CDW, but it probably doesn’t include extra liability coverage.

“As a general rule, I wouldn’t expect liability, personal accident benefits or personal effects on a credit card,” Hands says. “And even if you have collision and damage protection, you may only be protected for a vehicle that’s worth $65,000 and under, depending on the card.”

And there may be other restrictions. For instance, the coverage may not apply in certain countries. And, it will only cover you for a specific amount of time.

“Sometimes you’re not covered after 48 days of consecutive use,” Hands says. “But that’s a long time to rent a car.”

And, you’re only covered if you use that card to pay for the rental car. Although, some points cards will cover you if you redeem their points to rent the car.

You’re covered automatically – you don’t have to call to activate the coverage.

But, for most cards, you’ll only be covered if you turn down the CDW sold by the rental company.

“You have to decline the collision insurance at the rental counter,” Hands says.

Check your car insurance

If you have car insurance, you might already be covered for CDW, liability and accident benefits when you rent a car, as long as they’re all included in your policy. But only if you bought a special endorsement when you bought your policy.

“In Ontario, you’d have to have OPCF 27, which allows you to take your coverage with you when you rent a car,” Hands says.

If you do have the endorsement on your policy, it only works in Canada and the United States.

The rules are similar in other provinces. Generally, it’s a good idea to double check with your insurance company to see if you’re covered.

And, finally, you might not need to buy personal effects coverage if you have home or tenant insurance that already covers stuff that’s stolen from your vehicle, Hands says.

Overall, it’s a good idea to know exactly what coverage you already have before you get to the rental car counter, Hands says.

“I think people aren’t fully informed and they’re concerned that they may not have coverage they’re already paying for,” he says. “The rental car company jumps on that.”

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