Auto insurance in Costa Rica is a government monopoly of the INS (Instituto Nacional de Seguros). Liability insurance from the INS is mandated by law, but provides only minimal coverage. Rental agencies offer supplemental programs that cover deductibles and contingencies other than a simple traffic accident.
The cost of insurance can approach or exceed the cost of renting. There are three types sold by car rental companies.
Numbers 2) and 3) may be replaced by your credit card coverage (see details for credit card coverage). Check before you rent, and get it in writing. Some credit card companies have exclusions specifically against Latin American rentals. Some rental companies do not allow you to waive this insurance regardless of other coverage.
1) Required by Law—Mandatory SLI, TPL, SLC or API
Liability Insurance from the INS is required regardless of your policies at home or anything you think your titanium, platinum, or zirconium credit card card covers. The cost ranges from $US 10-20 per day depending on the vehicle. This insurance does not cover your rental car at all, only damages to other people, their cars, or property. Unless you purchase supplements, or have documented coverage from your credit card you are still responsible for all damages to the rental vehicle.
This insurance cannot be replaced with credit card coverage.
2) Optional—CDW or LDW
Collision Damage Waivers are a supplement underwritten by the rental company to reduce your liability for your rental car to the deductible amount ($US 1,500-3,000 depending on the company and vehicle) only in the case of an accident. The cost ranges from $US 15-40 per day depending on the company and vehicle. You are still responsible for all losses or damages in the case of negligence, vandalism, road damage, or theft.
3) Optional—Zero Liability
Under the names of Full Coverage, Vandalism Supplement, Damage Supplement, and Theft Insurance these extra policies are intended to reduce your liability to zero when combined with SLI and CDW. For example, if the trunk is damaged by thieves while they steal your luggage you will be held responsible for the damage unless you have purchased a third level of insurance. The cost ranges from $US 5-20 per day (added on top of the other insurances) depending on the fine print and vehicle.
More Confusion—The confusion and frustration involved in getting a fair price on a car rental gets worse before it gets better. Some rental car agencies lump the cost of one or more types of insurance into the rental cost, others combine the government insurance in their CDW or LDW coverage, and others seem to intentionally confuse the three types in order to make their rates appear better.
Insurance and Damage Waivers are a major source of income for the rental agencies because they are basically pure profit. The Rental Car Association of Costa Rica states that much of the pressure to purchase comes because the sales people are paid a commission on these products.
The rental company only pays about $2 per day to the INS for the government mandated SLI but then charges between $10 and $25 a day.
The CDW “insurance” is even more profitable because 99% of the time no damage occurs and in the rare cases that it does it’s nearly always covered by the two grand deductible that the renter still has to pay out of pocket even if they opted for CDW coverage.
It would better serve clients if they just raised their rates so they had a sustainable business model without high pressure sales (many simply won’t rent to you if you don’t purchase CDW) of questionable “insurance” products. Unfortunately the rental companies are kind of stuck because consumers don’t readily choose a company who’s rates look 25% higher up front even if they’re 10% lower in the end.
There are a number of rather bizarre aspects to renting a car in Costa Rica and we’ve made this list of tips for choosing a company, getting a good rate and renting a car.