Drivers should educate themselves before they reach the auto rental counter. Carefully review your auto insurance policy and check with your credit card issuer about auto insurance benefits. Protect yourself and save money by taking a few precautions and asking the right questions.
Car rental companies offer several different insurance options that your existing policy might already cover.
They typically offer the following products at the counter:
Collision Damage Waiver (CDW) is also referred to as a Loss Damage Waiver (LDW). If you have comprehensive and collision coverage on your own car, you will likely not need this additional protection. (Comprehensive insurance covers vehicular damages caused by accidents such as fire, theft, wind, hail or a run-in with a deer, vandalism, or theft. Collision insurance covers the cost of repairs or the actual cash value of the vehicle, if damaged in a crash or rollover.) This protection can cost an extra $10-$20 a day.
Liability Insurance covers medical expenses and damages to another person’s property as a result of a car accident caused by the insured’s negligence. If you are adequately insured on your own car, you may consider forgoing this additional liability protection. This supplemental insurance can cost $7-$14 a day.
Personal Accident Insurance offers coverage to the renter and passengers for medical bills resulting from a car crash. If you have adequate health insurance and disability income insurance, or are covered by personal injury protection under your own car insurance, you will likely not need this additional insurance. It usually costs about $1-$5 a day.
Personal Effects Coverage provides for the theft of personal items inside the rental car. If you have a homeowners or renters insurance policy, it generally covers this already. If you frequently travel with expensive jewelry or sports equipment, it may be more cost-effective to purchase a floater under your home or renters insurance policies so the items are fully protected when you travel. Generally, this coverage costs $2-$5 a day.
Car Rental Insurance Tips:
- Review your auto insurance policy or call your insurance agent before you reach the rental car counter.
- If your current policy doesn’t offer coverage for a rental car, see if an insurance rider can be added for a small fee.
- Many credit cards include some level of collision and theft protection. In most cases, these benefits are secondary to your personal auto insurance or the car rental company’s insurance, meaning the credit card company will only pay claims after other insurance coverage has been exhausted. The NAIC recommends you call your credit card company and ask about benefits.
- If you lack personal auto insurance and your credit card does not provide benefits, it might be wise to purchase the liability insurance and collision damage waiver at the car rental counter.
- Keep in mind that if it is a longer-term rental (e.g., a week, a month or more), there might be limitations on the coverage your existing auto insurance policy provides. Check with your insurance company or agent for details.
- If you don’t own a car, you might want to consider purchasing a non-owner auto insurance policy, because it provides benefits in addition to coverage for a rental car.
- When traveling on business, a personal auto policy will generally not apply, so check with your employer for guidance.
- Know that you are not alone if you find car rental insurance confusing. If you are unclear about the car rental insurance options, or are concerned that a rental company is misrepresenting information, check with your state insurance department.