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Rental car insurance protects a driver from damages to the temporary vehicle, themselves, others and their personal effects. Rental companies typically sell four main types of coverage. Some of them overlap with your existing auto insurance or credit card benefits, and others enhance your protection. In this article, we'll explain the different types, and help you decide whether you should get them.
Table of Contents
- Types of Rental Car Insurance
- Rental Car Insurance Through Your Credit Card
- Rental Car Insurance Through Your Insurer
Every rental car company from Avis and Enterprise to Hertz offers customers insurance coverage when they are at the counter picking up the keys to their vehicle. The majority of those options fall into these four categories of coverage:
|Type of Insurance||Benefits||Costs|
|Loss Damage Waiver (LDW)||Waives renter's responsibility for damage to or theft of rental car||$9 to $19/day|
|Supplemental Liability Coverage||Increases liability coverage to $1 million||$7 to $15/day|
|Personal Accident Insurance||Provides medical and accidental death benefits if you are injured or people are killed in the accident||$1 to $7/day|
|Personal Effects Coverage||Reimburses for any personal property that is stolen from a rental vehicle||$1 to $5/day|
A loss damage waiver, also known as a collision damage waiver (CDW), is not insurance. It’s a contractual agreement that waives the renter’s financial liability if their rental car is damaged in an accident or stolen. It will also cover costs if the rental car gets towed, spends time in a shop or any related fees a renter might have otherwise been charged.
You Should Get LDW if:
- You do not have collision and comprehensive coverage options on your normal policy
- You have collision and comprehensive coverage but have already filed previous claims
- You do not have a credit card that provides rental car insurance
If you have collision or comprehensive coverage on your car insurance, you can use it in place of an LDW. You can file a claim through your insurance company and they will take care of the damage. If you have already filed a claim or multiple claims to your insurance company, it may be better to pay for the LDW. Making a claim will cause your rates to go up, and if it would be a second or third claim, your company may even drop you from coverage. Ultimately, paying the nominal fee for the LDW would be cheaper than the price you would pay for raised rents or a lapse in car insurance.
This liability coverage supplements the auto insurance every driver is mandated in every state. It protects you in the event bodily injury or property damage claims are made against you as a result of an accident when you're driving a rental car. Renters are generally covered with up to $1 million of increased protection, though sometimes a limit of $2 million is available. Supplemental liability coverage is usually primary, which means it pays first for any medical damages before your car insurance coverage kicks in.
You Should Get Supplemental Liability Coverage if:
- You do not have car insurance (then it is mandatory)
- You have low policy limits ($50,000 and below)
- You are driving with many people not covered by your health insurance
If you do not have car insurance, you need to purchase this plan in order to rent a car. You should also strongly consider it if you have low limits on your car insurance. Going on a long trip may increase your odds of getting into an accident, especially if you plan on driving in a new city. The low cost of the insurance may make it worth it. You should consider it even more if you are driving with many people who you do not have covered on your health insurance plan. Chauffering a group increases the risk and exposure of potential liability cliams. Your own passengers (except your own household or other insured people on your policy) can potentially sue your insurer. Without insurace, you would have to pay to defend yourself out-of-pocket.
Personal accident insurance protects you and your passengers in the rental car from medical and accidental death expenses. In some cases, the insurance covers the renter for the entire length of the rental period - whether they are inside or outside the vehicle. Passengers, generally, are only covered while entering, exiting or riding in the rental car.
You Should Get Personal Accident Insurance if:
- Have low limits on your health insurance and/or PIP/Medpay insurance
Car renters probably do not need personal accident insurance, in our opinion. It usually provides the same kind of coverage as the personal injury protection (PIP) and medical payments options (or MedPay) on your existing car insurance policy. It also likely overlaps coverage with your health insurance policy. However, personal accident insurance would be the primary coverage in the event of an accident and there is no deductible (which there would be if your health insurance was the primary coverage).
Personal effects coverage insures personal belongings inside the rental car owned by the renter and any immediate family members traveling with them. In most cases, the property of non-family members and relatives who do not live in the immediate household with the renter will not be covered. Most of the policies pay in addition to and are secondary to any other insurance policy that might cover the loss of damages, such as homeowners or renters insurance. It usually only covers up to $2,000 worth of items.
You Should Get PEC if:
- You plan on keeping items in the car of importance but are worth less than $2,000
This coverage is also superfluous in our opinion. It is very particular and will not cover a loss due to “mysterious disappearance,” such as an item going missing. As well, household furniture, currency, coins, stamps, deeds, securities, tickets and documents are not covered (and cash, tickets, and travel documents would be some common items to most people on vacation). Some other things that do not fall under personal effects coverage include radar detectors, guns, fine art, contact lenses and artificial teeth and limbs. Other exclusions include automobiles, motorcycles, boats and other conveyances. For example, if you rent a vehicle and are pulling another second car behind it that gets stolen, the second lost automobile would not be covered.
Credit cards can be an easy and convenient way of getting coverage on your rental car. Credit cards issued by American Express, Visa, or MasterCard usually offer free LDW coverage. In order to qualify, the renter must be the cardmember and rent the car using the credit card associated with the perk to activate it. The name in which the car is rented must match the name of the cardholder essentially. You must also explicitly decline the LDW from the insurance company. Below you can see what each type of credit card covers in the case of rental car insurance:
|Credit Cards||All||All||Gold, Platinum, World and World Elite Cards|
|Period||15/31 days||30 days||15 days|
|Deadline to submit claim||90 days||180 days||180 days|
|Contact Info||(800) 847-2911||
(800) 338-1670 (domestic)
(216) 617-2500 (worldwide)
|Fine print||More Info||More Info||More Info|
Another thing to consider is the vehicle itself. If you purchase a loss damage waiver from a rental car company, you know that type of vehicle is covered under that agreement. That might not be the case with your credit card company’s loss damage insurance. Cars with higher suggested retail prices are frequently excluded from coverage, as well as antique cars and some manufacturers entirely such as Ferrari, Lamborghini, Maserati, Aston Martin, Porsche and Rolls Royce. You may read in finer detail the ins and outs of using a credit card for rental car insurance here.
There are insurance companies which offer stand-alone rental car policies or package the benefits as options with travelers insurance. Most serve as the primary coverage and include loss damage, personal effects and also some variation of roadside assistance. They usually have no deductible and are $10 or less. Renters must purchase these policies before accepting the rental car at the counter. In the event they need to make a claim, they would contact the insurer providing the coverage for the rental car, not their own auto insurance company.
Rental car insurance helps shield a driver from liability for the vehicle, themselves, others and their personal property. Rental car reimbursement helps pay or subsidize the expense of a temporary car while your vehicle is being repaired in the shop after a covered accident. It's an optional coverage on top of your existing car insurance policy.If you use rental car reimbursement to rent a vehicle while yours is in the shop, it does not guarantee that the rental car is insured. Whether you use a rental car company that partners with your insurer to pay for the rental car directly, such as Enterprise Rent-A-Car and GEICO, or one that doesn’t, refer to the guide above to decide what coverages to purchase.