Going on a vacation and planning to rent a car? Or maybe your car is being repaired and you need a rental car for a couple of days? Whatever your reason may be, it is important to know about insurance coverage for rental cars before you sign on the dotted line. This article will guide you through the basics of rental car insurance and help you understand what coverage you need, and what you don’t.
Types of Rental Car Insurance
When renting a car, you will be offered various types of insurance options. Here are the most common types of rental car insurance:
Insurance Type |
Description |
|---|---|
Collision Damage Waiver (CDW) |
Covers damages caused to the rental car in case of an accident, theft, or vandalism. |
Liability Insurance |
Covers damages caused to other people or their property in case of an accident. |
Personal Accident Insurance (PAI) |
Covers medical expenses and accidental death benefits for the driver and passengers of the rental car. |
Personal Effects Coverage |
Covers theft or damage to personal belongings inside the rental car. |
Roadside Assistance |
Covers emergency services like towing, tire changes, and lockout services. |
Collision Damage Waiver (CDW)
CDW is one of the most common types of rental car insurance. It covers damages caused to the rental car in an accident, theft, or vandalism. However, it does not cover damages to other cars, property, or injuries to yourself or others. CDW may also have a deductible that you are responsible for paying in case of an accident.
If you have comprehensive and collision coverage on your personal car insurance policy, you may not need to purchase CDW. Check with your insurance agent to see if you’re covered.
However, if you don’t have comprehensive and collision coverage, or if you’re traveling abroad and your insurance policy does not provide coverage, it may be wise to purchase CDW from the rental car company.
Liability Insurance
Liability insurance covers damages caused to other people or property in case of an accident. It is mandatory in most states and countries, and it is often included in the rental car rate. However, the coverage limits may not be enough to fully protect you in case of a serious accident.
If you have a car insurance policy, your liability coverage may extend to rental cars. Check with your insurance agent to see if you’re covered. If not, consider purchasing additional liability insurance from the rental car company.
Personal Accident Insurance (PAI)
PAI covers medical expenses and accidental death benefits for the driver and passengers of the rental car. However, it may duplicate coverage you already have through your health insurance or life insurance policies.
Before you purchase PAI, check with your insurance agent to see if you’re covered. If not, consider purchasing PAI if you’re traveling with children, or if you or your passengers do not have adequate health insurance coverage.
Personal Effects Coverage
Personal Effects Coverage covers theft or damage to personal belongings inside the rental car. However, it may duplicate coverage you already have through your home insurance or renter’s insurance policies.
Before you purchase Personal Effects Coverage, check with your insurance agent to see if you’re covered. If not, consider purchasing Personal Effects Coverage if you’re traveling with expensive items like laptops, cameras, or jewelry.
Roadside Assistance
Roadside Assistance covers emergency services like towing, tire changes, and lockout services. It can be a valuable service if you’re traveling in an unfamiliar place or if your rental car breaks down.
Before you purchase Roadside Assistance, check with your car insurance provider or your credit card company to see if you’re already covered. Some credit cards offer free roadside assistance as a benefit to cardholders.
Do You Need Rental Car Insurance?
Whether or not you need rental car insurance depends on your personal situation. Here are some factors to consider:
- Do you have comprehensive and collision coverage on your personal car insurance policy?
- Are you traveling abroad?
- Do you have adequate liability coverage?
- Do you have health insurance that covers you and your passengers?
- Do you have homeowner’s or renter’s insurance that covers your personal belongings?
If you have comprehensive and collision coverage on your personal car insurance policy, you may not need to purchase CDW. If you’re traveling abroad, your insurance policy may not provide coverage. If you don’t have adequate liability coverage, consider purchasing additional liability insurance from the rental car company. If you have health insurance and homeowner’s or renter’s insurance, you may not need PAI or Personal Effects Coverage.
FAQ
Can I use my credit card for rental car insurance?
Many credit cards offer rental car insurance as a benefit to cardholders. However, the coverage limits and requirements vary by card issuer. Check with your credit card company to see if you’re covered and what the requirements are.
What is a deductible?
A deductible is the amount you are responsible for paying before your insurance coverage kicks in. For example, if you have a $500 deductible and you get into an accident that causes $1,000 in damages, you will be responsible for paying $500, and your insurance company will pay the remaining $500.
Can I decline rental car insurance?
Yes, you can decline rental car insurance if you have adequate coverage through your personal car insurance policy or your credit card company. However, if you decline rental car insurance and you do not have coverage, you will be responsible for paying for any damages or injuries caused while driving the rental car.
What if I get into an accident while driving a rental car?
If you get into an accident while driving a rental car, follow these steps:
- Call the police and report the accident.
- Exchange insurance information with the other driver.
- Notify the rental car company of the accident.
If you purchased rental car insurance, follow the instructions provided by the rental car company. If you have personal car insurance or credit card rental car insurance, notify your insurance provider as soon as possible.
What if the rental car is stolen?
If the rental car is stolen, report it to the police and notify the rental car company immediately. If you purchased CDW, you will be covered for the theft. However, you will still be responsible for paying the deductible.
Conclusion
Renting a car can be a convenient way to get around, but it’s important to know about insurance coverage for rental cars before you hit the road. Make sure you understand the types of rental car insurance available, and what coverage you need based on your personal situation. And remember, if you have any questions or concerns, don’t hesitate to ask the rental car company or your insurance provider.