Buy or skip insurance at the rental car counter?

In 2005 I advised readers to refuse all of the extra insurance offered at the car rental counter. But recently a rental car agent tried to scare me into believing that I would be liable for loss of use if the car was damaged and couldn't be rented while it was being repaired. I declined the $20 per day insurance that would cover me for loss of use and downtime, but I called my insurance agent for reassurance.

If a rental car agent in search of a commission could almost convince me that I need this insurance, it's worth a reminder that anyone with auto insurance purchased in Minnesota is automatically insured for $35,000 of coverage when renting a car. It protects against loss of use, collision damage and liability. Even with only $10,000 coverage for property damage, state law mandates that the coverage when renting a car is increased to $35,000.

When I blogged about this recently, several readers were skeptical. One reader said he prefers to buy the extra coverage at the counter to avoid paying the deductible from his auto policy if he's in an accident. He's wasting his money. Rental car claims are not subject to the insured's deductible for collision or comprehensive coverage. If an insured has a $500 deductible for collision and totals a rental car, the property damage coverage of $35,000 will pay the entire bill. But insurance agents usually recommend $100,000 in property damage coverage. If you wreck a $25,000 Malibu rental crashing into a $30,000 Camry, you've just exceeded the maximum coverage of $35K.

One online comment suggests that the laws are different in Las Vegas and consumers should buy the extra coverage at the counter. According to Eric Rongstad of R.I.G. Metro Insurance in Golden Valley, you don't need to worry. Even if Nevada law doesn't cover loss of use, Minnesota auto insurance will.

Some online readers suggest paying for the extra insurance to avoid a premium increase if you have an accident. If you buy the collision waiver insurance from the rental car agency, the accident claim is reported to and covered by the car rental company, not the driver's auto insurance company. This could potentially prevent an increase in premiums due to the accident, according to one reader. There is some truth to this, but check with your insurance agent. Some companies such as Western National do not surcharge for a claim, regardless of who's at fault, said Rongstad. Ask how much an accident will increase your rates.

But there's a cheaper solution. If you have a Citibank Diner's Club, you have the only credit card that I know of that offers free primary insurance when you rent a car domestically. But Diner's Club is not accepting new cardholders, according to a customer service rep. Most credit cards offer secondary insurance, which supplements what your auto insurance doesn't cover. But anyone with an American Express card can buy Premium Car Rental Protection for $20 per car rental (not per day). The primary coverage offers $75,000 in protection against theft, loss and damage).

John Ewoldt • 612-673-7633 or jewoldt@startribune.com.