What auto insurance coverage do you need for a rental car?

Written by Ryan Hurlbert on February 25, 2011 & Posted in Auto Insurance

With a little planning, you can make sure you are protected when driving a rental car without buying excess insurance coverage. Coverage options vary, but there are four basic rental-car programs. Here's how to know what you need.

Making the cheapest auto insurance decisions at the car rental counter.

You step up to the rental counter with insurance card, driver's license, and credit card in hand. Then you are handed the rental contract, and in 30 seconds you have to decide to purchase or decline the Loss Damage Waiver, Personal Accident Coverage, Personal Effects Coverage and Liability.

You begin thinking, "I have insurance, my credit card covers me on rentals, but what is 'loss of use'? Am I covered?"

With a little planning before you get to the counter, you can make sure you are protected without buying coverage you don't need. The coverage options offered by rental companies vary by state and company, but there are four basic programs offered by most, according to the Insurance Information Institute.

Loss Damage Waiver

This is sold as a replacement or supplement to comprehensive and collision coverage on your personal auto policy. It pays for damage you cause to the vehicle, generally includes coverage for loss of use, and carries no deductible. If the damage was caused by speeding, driving off-road or driving under the influence the waiver may be void.

If you carry collision and comprehensive coverage on your personal auto policy, you are likely covered in a rental car. Check with your agent or auto insurance carrier to see what restrictions may apply to your policy. If you only carry liability insurance, you may be required to purchase this coverage in order to rent the car. If your policy doesn't include loss of use protection, you may wish to purchase this coverage; daily rental rates can add up if the repairs take more than a couple of days.

Liability Insurance

Usually the rental company liability insurance will only provide the state-mandated minimum coverage levels. If you have a personal auto policy, it should cover you in a rental and you won't need this coverage; check with your agent to make sure. Don't have your own policy? You may have to purchase this coverage from the rental company in order to rent the car.

Personal Effects Coverage

Provides coverage for theft of or damage to your personal property. If you have a homeowners insurance or renters insurance policy, your personal property is likely covered but your claim will be subject to your deductible. Personal Effects Coverage may have a lower deductible or no deductible at all.

Personal Accident Insurance

Provides medical payments for injuries sustained in an accident by you and your passengers. If you have Personal Injury Protection (PIP) or health insurance, you may not need this coverage.

Review your auto insurance coverage before you leave

Call your agent ahead of time, discuss the issues and rent with confidence. By understanding the limitations of your personal auto policy, you will be able to effectively pick rental car programs to span any coverage gaps when you arrive at the rental-car counter.


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