Everything you need to know about getting car rental insurance in Costa Rica

Before you book a Costa Rica rental car, it’s essential to understand the car rental insurance requirements in the country. Renting a car is simple, like anywhere in the world,  but not the same as renting the same vehicle in the U.S. or Canada. Rental car policies and insurance requirements can be sometimes confusing, so it pays to do your homework. This article will try to clear up some of that confusion for you.

In Costa Rica, marchamo is a kind of a personal property tax on cars that rental companies pay, which includes coverage of third parties, called Responsibilidad Civil (civil responsibility). Maximum coverage is limited to CR₡20,000,00. Other coverages include Collision Damage Waiver, Third Party Liability (Mandatory), and Full Liability (Optional).

Required insurance policies vary from company to company. Fees for these coverages—and extras such as GPS, car seats, etc.—vary and are a significant source of revenue for car rental agencies. In the U.S., many credit card companies, such as American Express, offer an alternative to insurance coverage fees. That’s not always the case in Costa Rica.

Every car rental company will ask you to buy mandatory insurance; unlike in the United States, for example, you may not substitute your own auto insurance for this. Again, the policies vary from rental agency to rental agency.

You should be aware that the rental agency will charge your credit card at the time of rental for any required deposit (ranging from $100 to $2000 depending on several factors, including car rental class; ask when you book!) and refund it within 72 – 96 hours after you return the car. This deposit covers any deductibles that might come into play should there be an accident or some other incident with the vehicle.

Generally, insurance coverages work, as explained below.

Mandatory third-party liability (TPL) coverage protects the customers named in the rental agreement from third party liability for property damage and personal injury to third parties.

Again, this is required insurance in Costa Rica and a condition of your car rental unless the rental agency can verify acceptable alternative coverage. Daily fees depend on the rental car class.

CDW, collision damage waiver, protects against the rental agency’s right to charge you for damage to their car, just like in the U.S. If you decline the coverage, you’ll need to provide official written proof that you have such coverage and that it is in force before the car rental.

If you decline CDW, the rental agency will charge your credit card for the full cost of loss or damages. You will have to make a claim for reimbursement directly to your credit card company. In other words, you pay upfront for loss or damage and have to apply to your credit card company for reimbursement; it’s your responsibility to know the terms of your credit card coverage.

You also need to know that if you plan to include drivers between 18 and 21 years old, full cover insurance isn’t available and you will be responsible for any accident coverage. If you don’t list all drivers, your coverage is void, and you have full financial responsibility for any damage.

CDW coverage often has two optional levels, basic and full TPL. Basic limits your liability for vehicle damages to a specific amount, excluding damage to tires, the radio, antenna, or windshield. Full TPL, also called Extended TPL, exempts you from third-party damages, with $0 deductible. Optional full coverage insurance, FCI, includes Full TPL, Accessories Protection Insurance, and eliminates your deductible (20%). However, you must buy the Full TPL and CDW.

Accessories protection insurance (API) covers standard equipment, such as windows, tires and rims, antennas, sound system, jack, etc. against breakage and theft. It’s usually only available when you choose CDW.

When traveling Costa Rica, a rental car gives you the freedom to explore, stopping where and when you want; but your freedom will feel more carefree with the right rental insurance. You can follow your nose or make unplanned stops to enjoy area attractions without the structure of organized tours.

Insurance requirements can be hard to understand; contact us before booking to get more information.