Car rental insurance is almost always shrouded in a haze of confusion. Do I need it? What kind do I need?
Am I already covered by my personal auto insurance? To make matters worse, insurance firms, car rental agencies, and credit card companies are all competing for your insurance dollars.
So, who can you trust when booking your car rental? The best answer? Yourself.
Ultimately, it's up to you to make sure you have the proper coverage. This will involve a little extra legwork, but in the end you'll be ready for anything. If you already have auto insurance on a personal vehicle, start your car rental planning with a call to your insurance agent. Most car rental policies extend to rental cars, but only offer partial coverage.
During your call, ask about two things: collision damage waiver and liability. The collision damage waiver (or CDW) covers any damage to the car that you're driving. Liability will cover damage you do to someone else. These are the two areas where a mistake could be costly.
Finally, it's important that you ask your agent if there is a limit on your collision insurance. Say, for example, that you normally drive a 10-year old Toyota, but during your vacation you hope to reserve a brand new Audi R8. It's important that you check to make sure your current auto policy will cover the complete cost of replacing the more expensive rental vehicle. Every insurance company is different, so don't just assume that you're covered.
What to Do if You Require Coverage
If you've dropped the collision insurance from your personal automobile, or you don't have a car to begin with, you will need to purchase car rental insurance from another provider: either the car rental company itself or through your credit card company.
Credit Card Car Rental Insurance Coverage
Some credit card companies now offer to supplement your car rental insurance. Before booking your rental, contact your credit card company and request to review your insurance options. They can fax you the information almost instantly to help with your rental decision. Again, make sure that you ask specifically about collision and liability coverage. Then find out if there are any exclusions to your coverage. Some credit card companies exclude certain types of cars, while others will restrict your coverage if you're driving outside of the U.S. Others will only cover you for a limited amount of time. It's worth noting that many credit card companies will not allow you to use their collision insurance if you purchase additional coverage from the car rental company. So don't be hasty. Take your time to review both coverage options before making your final decision.
Rental Counter Insurance Offers
- No two rental companies offer the same insurance coverage, so watch your wallet! For $10 to $25 a day, some companies will offer the whole shebang – collision, liability, contents and life insurance – while others will only offer collision. Even then, what's covered under the collision policy can vary. Some car rental companies cover anything on the car. Others often exclude basics, like tires and glass. Which is convenient, considering cracked windshields and flat tires are a common problem.
Other Insurance Options to Consider
Once you've handled the two major insurance requirements, collision damage waivers and liability, it's time to consider your other policy options:
Personal Liability Insurance Supplement (LIS)
A Personal Liability Insurance Supplement from a car rental company may offer you additional liability coverage that will pay over and above what your normal personal liability or business insurance covers. In most cases, the coverage that you have through your home insurance agent should be enough.
Personal Accident Insurance Coverage (PAI)
This coverage goes into effect if you get into an accident. PAI provides a one-time payment for you or a passenger in the case of death, injury, or maiming.
Personal Property Insurance / Personal Effects Coverage (PEC)
This coverage protects you in case you have something stolen from your vehicle. Again, check with your home insurance company as you might already be covered.
Fact or Fiction: Purchasing Car Rental Insurance Will Protect Me From a Rate Hike
If you're picking up rental insurance at the rental counter in an attempt to protect yourself from a rate increase from your regular insurance company, think again. If you happen to have an accident while driving your car rental, and you're at fault, your home insurance company can still hike your rates, regardless of who picks up the tab.