Rental cars are a popular way for travelers to get around when away from home. Unfortunately, things can sometimes go wrong in your rental vehicle, so it’s helpful to have rental car insurance. If you’re planning on renting a car for your next trip, it might be helpful to learn more about rental car insurance and its benefits. Keep reading to explore the pros and cons of purchasing rental car insurance.
What Is Rental Car Insurance?
Rental car insurance policies are specialized coverage plans that protect drivers when operating rented vehicles. While coverage varies by provider, rental car insurance can protect against vehicle damage, driver injury, theft, and loss of personal property. Rental car insurance is optional, making it different from standard car insurance policies. Rental car companies are already required to insure their vehicles according to the law in their states, so rental car insurance is an extra safeguard that covers any costs that might fall on the driver in case of an accident or other unfortunate event.
The most common rental car insurance providers are car rental companies, which usually give customers the option of purchasing coverage when they check out. Some individuals may also receive coverage via their existing insurance policies or through credit card companies.
Types of Rental Car Insurance
There are four primary types of rental car insurance that you might encounter when renting a vehicle.
- Loss damage waivers
- Personal accident insurance
- Personal effects coverage
- Liability coverage
These policies provide coverage for different types of damage, and car rental companies usually allow customers to choose which types of protection they need. In some cases, they may also offer rental car insurance packages that combine these elements for a lower price. Let’s understand how these policies can help you decide what coverage is right for you.
Loss Damage Waiver
A loss damage waiver (LDW) is a policy that releases you from payment obligations if your rental car is stolen, involved in an accident, vandalized, or damaged by environmental factors. While some policies are comprehensive and cover every part of the vehicle, others may exempt things like windows or tires. Some car rental companies offer similar policies called collision damage waivers (CDW). Unlike loss damage waivers, these plans only cover physical damage to the car, not theft. Unlike other insurance plans, CDWs and LDWs don’t require you to pay a deductible.
Personal Effects Coverage
Personal effects coverage can help rental car drivers cover the cost of items lost in vehicle robberies. While these policies will cover most belongings, such as electronics, luggage, and clothing, some items may be exempt. Be sure to check all personal effects policies carefully before purchasing to ensure that they cover your most valuable belongings.
Personal Accident insurance
Personal accident insurance is a type of plan that covers your medical expenses if your rental car is involved in an accident. In most cases, it will also cover medical bills for any passengers who are with you in the car. These policies are similar to the personal injury protection (PIP) that most car insurance providers offer. Some companies will also cover the cost of personal effects lost or damaged in an accident.
If you are at fault in an accident, you may be liable for the injuries you cause and any damages to property. The purpose of liability insurance is to protect rental car drivers from these expenses if involved in an accident.
Are You Already Covered?
Before you buy rental car insurance, it’s important to know if you need the coverage offered by the rental company. You may already have protection through one of your other policies that makes these plans unnecessary. For example, if you have a comprehensive car insurance plan, you may already have the protection offered by CDWs and LDWs. Additionally, your existing health insurance policy will likely cover all necessary medical care, giving you the same protection as personal accident insurance. Finally, home and rental insurance may cover the cost of personal belongings stolen from a rental car.
As a last line of defense, many credit card companies also offer coverage for damaged cars and stolen items. If your credit card offers these benefits, it might be good to use it to pay for your rental car. Before you decide, be sure to research the credit card company’s policies since they may require you to turn down other forms of insurance. In most cases, credit card benefits will apply after other insurance policies have run out.
How Much Does Rental Car Insurance Cost?
Another major factor in deciding whether to purchase rental car insurance is the price. Although these policies don’t usually cost very much on their own, they can significantly increase the price of your rental, especially if you need it for more than a few days. Rates for rental car insurance vary widely by provider, with LDWs costing $10-$30, liability coverage $10-$20, and personal accident and effects insurance costing between $5 and $15. Make sure you analyze your costs carefully before purchasing coverage.
Should You Buy Rental Car Insurance?
Before you decide on an insurance policy for your rental car, review your other policies and ensure that you still need coverage. If you have a basic plan that only meets the minimum requirements in your state, it might be beneficial to have the extra peace of mind provided by rental car insurance. These are some other reasons that you might consider purchasing rental car coverage.
- You don’t own a car or don’t have regular auto insurance
- You want to avoid deductibles charged by your regular insurance providers
- You are traveling internationally or in other areas where your insurance doesn’t apply
- You are traveling on business, and your personal insurance doesn’t provide coverage
- You are paying for the rental car on a debit card instead of a credit card
- The rental car company offers coverage for events not covered by your other policies
- You are renting the car long-term, and your credit card doesn’t provide coverage for the entire period
That’s an overview of what rental car insurance is and how it works. Hopefully, this will help you determine whether or not you should purchase rental car insurance on your next trip. Good luck in your travels and stay safe on the road.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.