If you’re planning to rent a car for a vacation or a business trip, you’ll need car insurance to protect yourself, your passengers, and the rental car itself in case of an accident or theft. In this article, we’ll discuss the different types of car insurance for rental cars, their coverage, and the factors that affect the cost of your rental car insurance. We’ll also answer some frequently asked questions about car insurance for rental cars.
Types of Car Insurance for Rental Cars
Many rental car companies offer several types of car insurance, including:
Type of Insurance |
Coverage |
|---|---|
Collision Damage Waiver (CDW) |
Covers damage to the rental car |
Theft Protection (TP) |
Covers theft of the rental car |
Liability Insurance (LI) |
Covers damages and injuries you cause to others |
Personal Accident Insurance (PAI) |
Covers medical expenses and accidental death or dismemberment |
Personal Effects Coverage (PEC) |
Covers loss or theft of your personal belongings in the rental car |
Let’s take a closer look at each type of car insurance for rental cars.
Collision Damage Waiver (CDW)
A Collision Damage Waiver (CDW), also known as Loss Damage Waiver (LDW), is an optional insurance that covers damage to the rental car. It waives the rental car company’s right to collect a high deductible from you in case of an accident or damage to the car. CDW does not cover damages to other people’s property, injuries, or loss of personal belongings. CDW is usually expensive, but it can save you from paying a large sum of money in case of an accident.
CDW has some exclusions, such as:
- Intentional damage or reckless driving
- Driving under the influence of drugs or alcohol
- Use of the rental car for illegal activities
CDW may also have limits on the types of vehicles, the locations, and the duration of rental.
Theft Protection (TP)
A Theft Protection (TP) is an optional insurance that covers theft of the rental car. It waives the rental car company’s right to charge you for the full value of the car in case it’s stolen. TP does not cover theft of personal belongings or damages to other people’s property or injuries.
TP may have similar exclusions and limits as CDW.
Liability Insurance (LI)
A Liability Insurance (LI) is mandatory in most states in the US. It covers damages and injuries you cause to others while driving the rental car. It also covers legal expenses if you get sued for causing an accident. LI has limits that vary by state and rental car company, but they are usually around $100,000 to $300,000 per accident.
LI does not cover damages to the rental car, theft of the car or personal belongings, or your own injuries or medical expenses. It’s also important to note that LI may not cover you if you’re driving outside the US or if you’re driving for commercial purposes.
Personal Accident Insurance (PAI)
A Personal Accident Insurance (PAI) is an optional insurance that covers medical expenses and accidental death or dismemberment. It’s similar to a personal health insurance policy or life insurance policy, but it’s specific to car accidents. PAI does not cover damages to the rental car, theft of the car or personal belongings, or injuries to others.
PAI may have limits on the types of injuries or the amounts of coverage per passenger.
Personal Effects Coverage (PEC)
A Personal Effects Coverage (PEC) is an optional insurance that covers loss or theft of your personal belongings in the rental car. It’s similar to a renter’s insurance policy, but it’s specific to car rentals. PEC does not cover damages to the rental car, theft of the car, or your own injuries or medical expenses.
PEC may have limits on the types of personal belongings or the amounts of coverage per person.
Frequently Asked Questions
Do I need car insurance for a rental car?
Yes, you need some form of car insurance for a rental car. Most rental car companies require you to have liability insurance, and they offer optional insurance for collision damage, theft protection, personal accident, and personal effects. If you have your own car insurance policy, check with your insurance company if it covers rental cars.
Can I decline the rental car insurance offered by the rental car company?
Yes, you can decline the optional insurance offered by the rental car company if you have your own car insurance policy that covers rental cars. You should also check with your credit card company if they provide rental car insurance when you use their card to pay for the rental car.
How much does rental car insurance cost?
Rental car insurance costs vary by rental car company, location, type of insurance, and duration of rental. CDW and TP can cost $10 to $30 per day, while LI, PAI, and PEC can cost $5 to $15 per day each. Some rental car companies offer bundled insurance packages that may save you money.
What happens if I damage the rental car?
If you have CDW, you’ll pay a deductible that ranges from $0 to $2,000, depending on the rental car company and the type of car. If you don’t have CDW, you may be liable for the full cost of the damages, which can be thousands of dollars. Make sure to inspect the rental car for existing damages before you drive it off the lot, and report any damages to the rental car company immediately.
What happens if the rental car is stolen?
If you have TP, you’ll pay a deductible that ranges from $0 to the full value of the car, depending on the rental car company and the type of car. If you don’t have TP, you may be liable for the full value of the car, which can be tens of thousands of dollars. Make sure to lock the rental car and keep the keys with you at all times, and report any theft to the rental car company and the police immediately.
What happens if I cause an accident that injures other people?
If you have LI, it will cover damages and injuries you cause to others, up to the limits of the policy. If your liability insurance is not enough to cover the damages, you may be sued for the rest. Make sure to drive safely and follow the traffic rules, and report any accidents to the rental car company and the police immediately.
Conclusion
Rental car insurance can be confusing, but it’s important to have some form of insurance to protect yourself and the rental car. Make sure to understand the types of insurance offered by the rental car company, their coverage, and their costs. Check with your own car insurance policy and your credit card company if they provide rental car insurance. Inspect the rental car for damages before you drive it off the lot, and report any damages or theft immediately. Drive safely and follow the traffic rules to minimize the risk of accidents and injuries.