Is My Car Rental Covered?
You’ve arrived at your destination, picked up your luggage, and made your way to the car rental counter to pick up your rental car. You review your contract with the agent, who verifies the cost of the rental, then tries to sell you a variety of coverage options to “protect” you if anything bad happens during the rental period.
It’s certainly tempting: you’ll be driving an unfamiliar vehicle, perhaps in an unfamiliar city, and the rental agent often strongly urges you to buy the coverage, implying that you won’t be covered otherwise.
Chances are you are covered, at least partially, but car rental companies are counting on you not knowing what your coverage includes, and can often parlay your uncertainty into add-ons that can more than double the cost of your rental.
When you get to the car rental counter, here are the insurance options you’ll likely be offered:
- Loss Damage Waiver (LDW): This eliminates your financial responsibility for any damage to the vehicle during the rental period, including theft, vandalism, collisions, and other damage, plus various administrative costs. It’s not insurance; it’s a guarantee that the car rental company will not come after you for any costs. There may be some exclusions, including damage due to negligence or reckless behavior. A damage waiver usually costs $9 – $30 per day.
- Collision damage waiver (CDW): Often used interchangeably with LDW, but in some cases applies to collisions only.
- Supplemental Liability Protection (SLP) or Liability Insurance Supplement (LIS): Most states require a certain amount of liability insurance, so the minimum will already be built into your rental contract. Additional liability protection will pay for any damage you cause to other vehicles or property, including lawsuits, up to a certain amount, usually $1 million. It costs around $10 – $15 per day.
- Personal Accident Insurance (PAI): This covers any injuries to yourself or your passengers, including costs for ambulance, medical and death benefits. It typically costs $1 – $5 per day and provides $2,500 in medical coverage, $250 for an ambulance, and a $175,000 – $200,000 death benefit.
- Personal Effects Coverage (PEC): This covers any loss you experience for items that are stolen out of your rental car. Coverage is typically capped at $1,500. The cost is usually $1 – $4 per day.
While these protection products do offer piece of mind for car rental customers, chances are you already have some coverage.
How You’re Covered
Accidents & Car Theft
If your personal car insurance policy includes collision (which covers repairs to your car after an accident) and comprehensive (which covers loss or damage not due to an accident, such as fire, car theft, vandalism or hitting an animal), that coverage will extend to a rental car as long as you are using the rental car for personal, non-business purposes. You will, however, have to pay any deductible, and the claim could affect your insurance rates.
Most major credit cards provide some form of coverage, but only if you use that card to reserve and pay for the car rental and decline all extra coverage offered by the car rental company. Every card issuer has a different policy and different exclusions (typically for duration of rental, driving conditions, type of vehicle or country of rental), so be sure to check the coverage offered by each of your credit cards before you reserve a car. In addition, most credit card car rental policies only go into effect after you have already exhausted the coverage offered by your own personal car insurance policy.
Damage You Cause
If you have a car insurance policy in Connecticut, you are legally required to have $20,000 per person/$40,000 per accident in bodily injury liability (which covers the medical expenses of people involved in an accident that is your fault) and $10,000 in property damage liability (which covers damage to the other car involved in an accident that is your fault).
Your own liability coverage extends to a rental car, but liability costs can add up fast. Talk to your agent or check your car insurance policy (and your umbrella policy, if you have one) to see how much liability coverage you have.
Injury to Yourself
Any injuries you sustain should already be covered by your health insurance policy and/or your car insurance policy’s MedPay provision, and death benefits by your life insurance policy. Your usual deductible will apply.
Theft of Personal Articles
Your car insurance policy covers theft of your car itself, but not its contents. Loss due to theft should be covered by your homeowner or renter’s insurance policy, even if you are away from home at the time. Your deductible will apply, however, so if the cost of the stolen items is less than your deductible, you won’t be reimbursed. Any claim you make could also affect your future insurance premiums.