There are four main rental car insurance options that you could be offered through your rental agency: a loss damage waiver (LDW), liability coverage, personal accident insurance and personal effects coverage.
Below are the different types of car rental insurance. Consult your car rental agreement to see exactly what’s covered.
Rental Car Liability Insurance
Car rental companies also sell liability car insurance. This covers other drivers’ property damage and injuries resulting from an accident you cause. If you have personal liability insurance, your own policy will provide this coverage (as long as the trip isn’t for business). But if you know you’re going to be cruising in Miami alongside Lamborghinis and Ferraris, $10,000 in liability coverage probably isn’t going to cut it, so you may want to up your policy limits.
If you are a frequent traveler but don’t own a car, you can also get non-owners car insurance to cover you in all driving situations.
Rental Car Loss-damage Waiver Insurance
This option waives your responsibility to pay for a total loss, accident damage, environmental damage, theft and vandalism. A collision damage waiver (CDW) is similar, but it doesn’t protect against theft. These waivers basically act like comprehensive and collision policies for the rental. If you already have comprehensive and collision insurance, you probably don’t need this.
However, a loss damage waiver will not require you to pay a deductible, which is another thing to consider.
If you cause damage to your vehicle and it gets sent to the repair shop, the rental car company can charge you fees for each day the car is out of commission. The loss damage waiver will protect you from these fees, as will most full coverage insurance policies. However, some will not, so it’s a good idea to look into your own policy before you rent a car.
Personal Accident Car Rental Insurance
This type of coverage pays for medical bills for you and your passengers, regardless of who is at fault for an accident. It’s similar to medical payments (MedPay) and personal injury protection (PIP) that you’d get on your standard vehicle.
If you already have either of these insurance products, you do not need personal accident insurance. Additionally, if your personal car insurance doesn’t cover your medical costs, your health insurance can cover them after you pay your health deductible. Personal accident insurance doesn’t require a deductible.
Rental Car Personal Effects Coverage
This additional coverage option protects your personal items like electronics, luggage and clothing. If you have a homeowners or renters insurance policy, it will cover personal items stolen from a rental car as well.
Other Types of Car Rental Insurance
Besides options from the rental car company, you might be covered through your credit card company or travel insurance plan.
Credit Card Rental Car Insurance
Premium credit cards often include primary coverage for rental cars. Primary coverage comes with high limits and can handle the entire claim, which means your own insurance company won’t know about the claim (and won’t raise your rates).
On the other hand, standard cards often include secondary coverage. This comes with lower limits and requires you to file a claim with your own insurance company first. In either case, you have to book the rental with the credit card to qualify for coverage.
Car Rental Travel Insurance
Travel insurance programs can typically cover collision and loss of use at a cheaper price than the rental car company as well.
International Car Rental Insurance
If you travel to Mexico or Canada, your personal insurance may or may not cover rental cars in those locations. It’s a good idea to speak to your agent to find out before you go. Generally, standard auto insurance companies in the U.S. don’t cover rentals abroad, so it may be wise to purchase rental car insurance in that situation.
