Things to Consider When Renting a Car
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.
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