Whether you’re hitting the road for a weekend getaway or renting a car from the airport, knowing all your insurance options before you get to the car rental counter is wise. So what are the basics? Here is an overview to help you the next time you rent a car.
Understand what your car rental company offers
Should you take the insurance that your car rental company offers you at the checkout counter? It depends on your current personal insurance situation. If you have auto insurance already, you might have some added options beyond the rental company coverage. Either way, here are a few basics on what most rental companies will offer.
Loss damage waiver
A loss damage waiver (LDW), also known as a collision damage waiver (CDW), waives financial responsibility if your rental car is damaged or stolen. This type of policy also offers coverage for “loss of use” charges if the rental is being fixed or towed.
Liability insurance
By law, car rental companies must provide the state-required minimum liability insurance coverage. However, the Insurance Information Institute (III) says this plan often doesn’t offer enough coverage. Liability coverage won’t help protect you if the rental is lost, stolen or damaged. It will only help protect you in the event of an accident.
Personal accident insurance
Personal accident insurance will cover injuries to you and your passengers in the event of an accident.
Personal effects coverage
Personal effects coverage offers insurance coverage for any items stolen from a rental car. If you don’t have homeowners or renters insurance, this is something you should consider.
How your credit card may help
If you’re considering relying on the coverages that your credit card company may offer, bear in mind that deductibles and restrictions are probably in place. Every credit card company has different coverage options, so it’s best to call them to investigate the fine print.
Primary coverage or first to respond
Some credit card companies offer primary coverage, which means they respond to the claim first. There are limitations and exclusions that you’ll need to clarify with your credit card company. Some coverage excludes certain vehicles (trucks, luxury cars, moving vans) or price valuations (nothing over $50,000).
Secondary coverage or second to respond
Most credit card companies offer secondary coverage, which means you have to have a primary insurance policy in place. If you don’t already have personal auto insurance, then you’ll be without coverage. Secondary coverage is like an excess policy and may also help with out-of-pocket expenses.
Consider coverage you may already have
If you own a car and have full coverage, then that coverage will most likely carry over to cover your rental car. If you have a claim involving your rental car, your auto insurance should cover the rental car (with the same exclusions and limits). The claim will appear on your personal auto insurance history, though, which could affect your rates.
Out-of-pocket at the counter
Even if you have comprehensive and collision auto insurance, you’ll likely have to pay car rental damages upfront and recoup those costs by filing a claim with your insurance company. In this case, you may be signing a credit card bill for hundreds or even thousands of dollars when you return the damaged car, not knowing if you’ll get that money back. For this reason, most car rental companies won’t accept debit cards or credit cards with small limits.
Your insurance professional can help
No matter what your travel plans, before you rent a car, do your research before signing on the dotted line. Review your personal auto policy and speak with your insurance professional about which options are ideal for your situation.
