Information On Rental Car Insurance

October 26, 2017 · Posted in General Articles on Car Insurance 

We have all experienced walking into the car rental agency wanting to rent a car. We go through the normal process of picking the right car, where we are allowed to drive but one crucial part that has most of us stumped is the insurance side of it. Most car rental agencies have multiple insurance plans which can really put the spanner in the works of someone who is simply looking for a simple insurance plan for their rental car. Of all the processes involved in renting a car, the car rental insurance is by far one of the most difficult to understand and an area where people can be easily taken advantage off. In this article we will explore the many ways that rental car insurance is used as a way for rental companies to get you to part with more cash than necessary.

In order to full understand rental car insurance, we need to know the different types that are available to us. Below we will list the commonly available coverage types.

CDW (Collision Damage Waiver), LDW (Loss Damage Waiver), PDW (Physical Damage Waiver). Its basically a nifty way of saying that if anything happens to your rental car, you don’t need to pay a cent. Nothing. Nada. The problem is it doesn’t cover anybody else that is involved in an accident. It is also prudent to note that some insurance policies have a reduced use limitation. It’s something that limits the coverage, like you driving past a certain zone or driving intoxicated etc. Read and understand the limitation before agreeing to the insurance.

LIS (Liability Insurance Supplement) This insurance is in addition to the one above. It will cover any third party that is involved with any accident that happens with the rental car.

PAI (Personal Accident Insurance or Coverage) This coverage option takes care of the passengers of the ill fated rental car that got into the accident. It will take care of whatever costs from the maiming that requires hospitalization.

PEC (Personal Effects Coverage) or Personal Property Insurance This coverage item looks after any belongings that could either be damaged in an accident or be stolen or lost for whatever reason.

Above we have listed the standard rental car insurance coverage from the most basic at the top to the extras at the bottom. Generally, the most basic coverage items that you must have are a combination of CDWs and LISs. This will basically cover you from any damage that you do if you were in an accident but minus whatever costs incurred to you, your passengers and your belongings.

One thing that many people don’t know is that if they have comprehensive car insurance for their car, it might even be comprehensive enough to cover the CDW and LIS needs of your rental car. What this means is you might actually be covered right from the get go from your own car insurance. This is a situation that happens more often than you think. It is however vital that you check with you current insurance provider to see if your policy extends to rental cars. Never get a rental car assuming that you already have rental car insurance from your own comprehensive coverage. There are times when your policy changes from year to year and your rental coverage may change without you knowing.

Sometimes you might not only be covered by your comprehensive plan but sometimes even your credit card too. This is especially true for higher end “gold” or “platinum” offerings. These cards normally have some sort of personal property protection package built in and as such will already work as an PEC insurance coverage. As with its availability, it will also be very wise to check with your credit card provider. Again it is very dangerous to assume you are already covered.

The right way to approach this is to actually confirm with your insurer and credit card company as a part of your pre-travel activities. This checking will confirm whatever coverage that you have inherently so you don’t need to double up your rental car insurance. Naturally, paying for the extra insurance at the rental car agency isn’t necessarily the smartest thing either. Doubling up your insurance means you’ll be paying double for a set coverage amount. It is law that you can’t profit from insurance.

It should also be noted that if you opt to get insurance from the rental car agency that it will actually cost more than what you can get from your own car insurance company or as provided by the credit card. It isn’t abnormal to find that rental car agencies will charge almost double for the insurance coverage. This is a part of their profit model to catch customers with no insurance so they are forced to get it or not get the rental car.

Rental car insurance is certainly needed however you don’t need to get it from the rental car agency. Most rental car agencies sell insurance as a side-income and are certainly trying their best to make you part with more money than you are comfortable with. It would be prudent to first check that you aren’t covered and only rely on the rental car agency insurance products as a last choice.


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