What Insurance is Needed for Rental Cars?

When you’re renting a car, it can be difficult to know what insurance you need to purchase. There are so many different types of coverage available, and it can be overwhelming to figure out which ones are necessary. In this article, we’ll provide an overview of the insurance options for rental cars, and help you determine which ones you may need.

Do I Need Rental Car Insurance?

The answer to this question depends on your existing insurance policies. If you have a personal auto insurance policy, it may provide coverage for rental cars. Similarly, if you have a credit card that offers rental car insurance, you may already be covered.

Before you decline rental car insurance, it’s important to check with your insurance company and credit card company to see what coverage you have. If you don’t have existing coverage, you’ll need to purchase insurance from the rental car company.

Types of Rental Car Insurance

There are several types of rental car insurance available. Some are required by the rental company, while others are optional. Here’s an overview of the different types:

Collision Damage Waiver (CDW)

Collision Damage Waiver (CDW) is often required by rental car companies. It covers damage to the rental car in the event of a collision, and can be purchased for a fee. If you have a personal auto insurance policy, it may provide coverage for rental cars, including CDW. Check with your insurance company to see if this coverage is included.

It’s important to note that CDW is not insurance, but rather a waiver of the rental car company’s right to pursue damages from you in the event of a collision. If you decline CDW and are involved in a collision, you may be responsible for paying for the damage to the rental car.

If you’re planning to use a credit card to pay for the rental car, check to see if the card offers collision coverage. Some credit cards provide this coverage for free, as long as you use the card to pay for the rental.

Even if you have CDW coverage, you may still be responsible for paying a deductible in the event of a collision. This deductible can be several hundred dollars, so it’s important to factor this cost into your rental car budget.

Loss Damage Waiver (LDW)

Loss Damage Waiver (LDW) is similar to CDW, but it covers damage to the rental car in the event of theft, vandalism, or other non-collision events. Like CDW, LDW is often required by rental car companies and can be purchased for a fee.

If you have a personal auto insurance policy, it may provide coverage for rental cars, including LDW. Check with your insurance company to see if this coverage is included.

Personal Accident Insurance (PAI)

Personal Accident Insurance (PAI) covers medical expenses for the driver and passengers in the event of an accident. This coverage is optional, but may be a good idea if you don’t have health insurance or if your existing insurance policy has low limits for medical expenses.

It’s important to note that PAI only covers medical expenses, and does not provide liability coverage. If you’re responsible for an accident that causes injury or property damage to another party, you may be held liable for the damages.

Personal Effects Coverage (PEC)

Personal Effects Coverage (PEC) covers loss or damage to personal belongings in the rental car. This coverage is optional, but may be a good idea if you’re traveling with expensive items such as electronics or jewelry.

It’s important to note that PEC only covers personal belongings, and does not provide liability coverage. If you’re responsible for an accident that causes injury or property damage to another party, you may be held liable for the damages.

FAQ

What happens if I decline rental car insurance and get into an accident?

If you decline rental car insurance and are involved in an accident, you may be responsible for paying for the damage to the rental car. If you have personal auto insurance or a credit card that provides rental car coverage, these policies may provide coverage for the damage.

Do I need to purchase all of the insurance options offered by the rental car company?

No, you only need to purchase the insurance options that you feel are necessary. If you have existing insurance coverage, you may not need to purchase any additional coverage.

What should I do if the rental car company tries to sell me additional insurance?

If the rental car company tries to sell you additional insurance, it’s important to carefully consider the coverage and the cost. If you’re unsure whether you need the coverage, check with your insurance company or credit card company to see what coverage you already have.

Can I purchase rental car insurance after I’ve already picked up the car?

Yes, you can usually purchase rental car insurance after you’ve picked up the car. However, it’s important to note that the rental car company may charge you a higher rate for insurance if you wait until after you’ve picked up the car.

Why is rental car insurance so expensive?

Rental car insurance can be expensive because it provides coverage for a short period of time, and the cost of claims can be high. Additionally, rental car companies may charge a markup on insurance to make a profit.