Renting a car? Here's the kind of insurance you need
Car rental companies will offer you a number of insurance options at the counter. Here's how to find out which is your best option.
Summer is here, and with it comes vacation time for many. Whether you’re going by car or plane, you may be renting a car depending on your excursion.
No matter where you’re going, it’s important to know which kind of insurance you need with your car rental. Jason Hargraves from insuranceQuotes.com argues that the insurance your car rental company offers you at the check out counter may be your best option, depending on your own personal auto insurance policy.
Hargraves says if you own a car and have full coverage, then that coverage most likely will carry over to cover a car you might rent. Also, credit card companies offer a variety of protections if their card was used to rent a vehicle.
However, deductibles and restrictions are probably in place, which can leave you on the hook for some out-of-pocket expenses. That’s where car rental companies’ insurance plans pick up.
Weighing your options
There are a number of different types of insurance policies car rental companies will offer to customers, and it’s important to know exactly what they are to discern which one best fits your needs and policy.
The first type of insurance is a loss damage waiver (LDW), also referred to as a collision damage waiver. According to AAA, LDW waives financial responsibility if your rental car is damaged or stolen. It also provides coverage for “loss of use” charges if the rental is being fixed or towed.
According to the Insurance Information Institute (I.I.I), if you carry comprehensive and collision auto insurance, you may already be covered for damage to a rental car and would likely be safe declining the rental car company’s waiver.
The second type of insurance car rental companies offer is liability insurance. By law, rental companies must provide the state required minimum amount of liability insurance coverage, but I.I.I. says this plan often doesn’t provide enough protection.
Liability coverage will not protect you if the rental is lost, stolen or damaged. It will only protect you in the event of an accident.
If you carry your own personal auto insurance and have opted for the recommended higher liability limits, than you are adequately protected, and a liability insurance plan would be redundant and unnecessary.
Related: What you should know about auto accident liability exclusions
Personal vs. renters
The last insurance options your car rental company offers is personal accident insurance and personal effects coverage. Personal accident insurance will cover injuries to you and your passengers in the event of a crash. Personal effects coverage provides insurance protection for any items stolen from a rental car. Renters should consider this coverage if they do not carry homeowners or renters insurance.
If you’re renting a car for work, check with your employer first to see how the company wants you to handle insurance coverage. That course of action may depend on whether you carry personal coverage or whether you have a company credit card in your name. The easiest for you would be to take the coverage offered by the rental company and paid for by your company. Otherwise, your personal policy could come into play.
No matter what your travel purpose is, before you rent a car, experts say your best course of action is to do your research first and foremost. Review your personal auto policy and talk to an insurance professional about which options are best for you.
Related: What you should know about auto accident liability exclusions