Insuring Rental Cars

Rental cars require insurance and it’s usually not included in the price of the rental. Before you rent, check with your insurance company to see what coverage you already have. In many cases, your personal auto coverage will apply to your rental. Be sure that you have collision and comprehensive coverage in case your rental is stolen or in an accident. Some credit cards will also provide additional coverage when they are used for the rental.

Car rental companies aren’t shy about selling you insurance along with the rental and they make a substantial profit on it.

Here’s some of what they offer:

Collision Damage Waiver (CDW), or Loss Damage Waiver (LDW) covers you if your rental car is damaged or stolen. If you already have comprehensive and collision on your own car, you may not need to purchase this coverage.  If you have an older model car without collision coverage, or if you just decided against carrying it, look into this coverage.  Look for alternate insurers if you rent cars often as it’s expensive from the rental companies.
Liability Insurance is usually provided at the state minimum level and is included with the basic rental price. Note that the state minimum in most states is only $10,000, and that doesn’t go very far if you hit a BMW, so more coverage is usually a good idea. Additional LI coverage may be offered as an extra, but in most cases, if you have liability insurance through a personal auto or homeowner’s policy, it may carry over.
Personal Accident Insurance (PAI) covers you and your passengers for medical and ambulance costs. This coverage may carry over from your personal auto insurance and may be duplicated by health insurance.
Personal Effects Coverage (PEC) or Personal Effects Protection (PEP) covers items that you might have in your car if they are stolen.

High Profit Insurance

Most rental representatives are trained to push extra insurance as it is highly profitable for rental companies.  Know your coverage before going up to the rental counter as the insurance is good if you need it, but a waste of money if it duplicates coverage that you already have.

Note that many credit cards provide coverage for the collision damage waiver or loss damage waiver which are typically the most expensive coverage offered at the rental counter.  Credit cards usually do not cover liability and injury concerns.  Debit cards typically do not provide this added coverage.  Call your credit card provider or check your benefits guide to be sure.