Whether you’re heading out for a weekend getaway or renting a car from the airport, it’s wise to know all of your insurance options before you get to the rental car counter. So what are the basics? Here is an overview that will 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 checkout? It depends on your current personal insurance situation. If you already have car insurance, you may have some additional options beyond the rental company’s coverage. Anyway, here are some basics about what most rental companies will offer.
A Loss Damage Waiver (LDW), also known as Collision Damage Waiver (CDW), waives financial responsibility if your rental car is damaged or stolen. This type of insurance also offers coverage for “loss of use”; charges if the rental is fixed or towed.
By law, car rental companies must provide the state-mandated minimum liability insurance coverage. But the Insurance Information Institute (III) says this plan often doesn’t offer enough protection. The liability cover does not protect you if the rental is lost, stolen or damaged. It will only protect you in case of an accident.
Personal accident insurance
Personal accident insurance covers damage to you and your passengers in the event of an accident.
Coverage for personal belongings
Personal effects coverage offers insurance coverage for any items stolen from a rental car. If you don’t have home or renter’s insurance, this is something you should consider.
How your credit card can help
If you’re considering relying on the protections your credit card company may offer, remember that deductibles and restrictions are likely in place. Each credit card company has different coverage options, so it’s best to call them to check the fine print.
Primary coverage or first to respond
Some credit card companies offer primary coverage, meaning they respond to the claim first. There are limitations and exclusions that you need to clarify with your credit card company. Some coverage excludes certain vehicles (trucks, luxury cars, movers) or price ratings (nothing over $50,000).
Secondary coverage or others to respond
Most credit card companies offer secondary coverage, which means you must have primary insurance in place. If you don’t already have personal auto insurance, you will be without coverage. Secondary coverage is like deductible insurance and can also help with out-of-pocket expenses.
Consider coverage you may already have
If you own a car and have full coverage, that coverage will most likely carry over to cover your rental car. If you have a claim related to your rental car, your car insurance should cover the rental car (with the same exclusions and limitations). However, the claim will appear on your personal car insurance history, which may affect your rates.
out of the pocket at the counter
Even if you have comprehensive and collision auto insurance, you will likely have to pay for rental car damages upfront and recover those costs by filing a claim with your insurance company. In this case, you could be signing a credit card bill of hundreds or even thousands of dollars when you return the damaged car, not knowing if you will get the money back. For this reason, most car rental companies do not accept debit cards or credit cards with small limits.
Your insurance specialist can help you
No matter what your travel plans are, do your research before you rent a car before you sign on the dotted line. Review your personal auto policy and talk to your insurance specialist about which options are ideal for your situation.