However, the insurance landscape is changing when it comes to car rentals. In this video, the Insurance Information Institute gives you an overview of the types of coverage available from car rental agencies, and what may (or may not) be covered by your own insurance.

The bottom line? Don’t wait until you’re signing papers at the car rental counter to make a snap decision without some advance knowledge. Check with your insurance agent and credit card company before you leave on your trip.

What then, do you do when you’re sightseeing along the Canal du Midi, in France, and you get into a fender-bender in your rented, stick shift, Peugeot or Renault? First, breathe deeply, then, call the rental agency. In most cases, you’ll find that if you used a credit card to pay for your rental, damage to the car will be covered, though damage to other property, or injuries to people, will not.

If relying on the coverage offered by your credit card is too risky an endeavor for you, here are a few other things you should know before renting a car overseas:

1. Don’t trust in your own insurance: Most American insurance companies simply don’t offer rental car coverage outside of North America, even if you pay extra. If you don’t want to pay at the rental counter, and your trip will last longer than a couple of weeks, call the rental company in advance and have them recommend local providers who will sell you a short term policy. It may end up saving you money.
2. Don’t trust in American Express: There’s no doubt that the automatic coverage that comes when you use an AmEx card is excellent if you’ve misplaced your laptop, but when traveling overseas, most places don’t actually accept The Card. Mastercard and Visa, however, are usually widely accepted, and, as mentioned above, most also offer rental car insurance that will cover repairs. Be certain that anyone who will drive the car is named on the rental agreement, though, or you may not be covered, and claims can be denied if specific rules aren’t followed, so do your homework before you leave home.
3. DO Trust the Rental Company: This is the one time to accept the rental car provider’s insurance, especially if you’re only staying for a short while. According to the Wall Street Journal’s MarketWatch.com, you can get collision and theft coverage for about US $180/week. This covers basic liability for everyone except the driver, as well, but you can add personal insurance for about $12/day. But you should also know that the standard deductibles are fairly pricey – about $1,000 at some companies.

What’s the best way to protect yourself, then? Do as much of the legwork as you can before your trip ever starts…or consider sticking to mass transit whenever possible.

The legal concept in question, “vicarious liability,” refers to holding non-negligent owners responsible for damages, no matter who was actually driving the vehicle. The 2005 Graves Amendment, a federal law, prohibits such liability, except in states that have insurance or financial responsibility requirements for rental car companies. Representative Samuel Graves (R-MO), the law’s sponsor, believes it will save consumers $100 million a year, nationally.

So what’s the issue in Florida? The Supreme Court is investigating whether or not a Florida “Financial Responsibility” law meets the Federal exception criteria. The existing Florida state law says that if the person who drives or leases a rental vehicle is either uninsured, or has combined insurance limits of less than $500,000, the rental car company, “…shall be liable for up to an additional $500,000 in economic damages.”

Marjorie Gadarian Graham, representing the accident victim, told the court, “It is implicit that there is a requirement to maintain insurance albeit it is not expressly stated.” She also argued that the state legislature intended it to be an insurance requirement and that it’s explicit enough to except Florida from the Graves Amendment.

Enterprise Leasing Company’s attoriney, David C. Boruke, disagreed, and countered by saying, “Nothing is required. It’s an option. It’s an opportunity to make a cost-benefit analysis, but it is not required insurance by any stretch of the imagination.”

A trial judge in Palm Beach County and the 4th District Court of Appeal, in a 6-4 opinion, sided with Enterprise. Accident victim Rafael Vargas’s vicarious liability claim was rejected by both courts. Vargas had been injured when an Enterprise-owned vehicle rear-ended his car in February 2006. Vargas never alleged that the rental car company was at fault or negligent, nor did he allege that the lease was improper.

Despite siding with Enterprise, The 4th District certified the issue to the Supreme Court calling it a “…question of great public importance…” There are severall similar cases on hold pending a ruling, in Flordia, and other states are facing similar issues. One such state is Minnesota, where the state Supreme Court ruled that the Graves Amendment pre-empted a similar state law already on the books there.

Most of the resultant litigation has been at the federal level. The 11th U.S. Circuit Court of Appeals in Atlanta, GA, ruled that Florida’s law was also pre-empted. This means that the Florida court’s decision would apply only to state courts.