Whether you’re on a business trip or on vacation, you may have heard the question car rental companies typically ask; that is, if you want additional insurance for your rental car. You may say yes and buy out of fear or reject it, believing you are covered for rental car purchases. However, the reality is that unless you look up your current auto insurance policy and see if you’re covered, you really won’t know and you may miss out on some savings. So it’s always a good idea to call your insurance agent to get your policy details.
Normally, there are two cases in which you are covered by car insurance for a rental car. Both ideas have their pros and cons.
Have a car insurance policy. Some insurance companies also extend their coverage to rental cars, as long as you are taking a leisure vacation, so be sure to ask your insurance agent about this. But know that any coverage gaps you have on your policy will also extend to your rental car. And if you’re traveling on business, you should have your employer pay for the insurance, since your auto insurance policy won’t apply.
Have auto insurance protection with a credit card company. Some credit card companies may provide protection for cars that are rented with your credit cards. While coverage varies by credit card company, the terms and conditions of your policy may change from time to time. However, insurance protection generally only covers physical damage to the car; generally does not cover personal injury, liability, or theft of personal belongings.
Types of Additional Auto Insurance Coverage for Rental Services
If you know that having additional coverage is right for you, know that there are generally four common insurance options offered by most rental car companies:
Collision Damage Waiver and Loss Damage Waiver (CDW and LDW). Pays if your rental car is lost to theft, vandalized or damaged in a collision.
Personal Accident Insurance (PAI). Pay your medical costs due to a car accident in your car rental.
Supplemental Liability Insurance (SLI). Gives you up to $1 million in extended liability coverage.
Personal Effects Coverage (PEC). Pays for any personal belongings of yours stolen from your car rental.
Some things to keep in mind with car insurance
Here are some tips to keep in mind when determining if you want to add additional coverage to your car rental:
Don’t buy the same coverage twice if you have an auto insurance policy, unless you have gaps in coverage.
Talk to your auto insurance agent before you decide to purchase additional auto insurance for your rental car.
Ask the car rental company for a copy of their insurance policies.
Compare the company’s price to auto insurance quotes in your area to see which is better.