Do You Need Rental Car Insurance?

So, have you planned your upcoming holidays? You may want to rent a car once you reach your holiday destination. Renting a car affords you the flexibility of movement instead of having to rely on public transportation.

One headache experienced by most folks when they set out to rent a car is determining what type of insurance coverage they would need for the vehicle. Usually a car rental agency would ask if you would like to purchase a Collision Damage Waiver (CDW) also known as Loss Damage Waiver (LDW) or personal liability insurance. Do you need such coverage?

Let’s look at LDW first:

LDWs waive financial responsibility on your part in the event that your car is damaged or stolen. In most instances, LDWs also cover loss of use. This is the loss sustained by the car rental company in the event the rented car is damaged and is being repaired at the workshop.

LDWs may come with hidden clauses. Check to see if the waiver becomes void if accident is caused through speeding or driving while under the influence of alcohol. If your existing auto insurance policy does not include adequate LDW, be prepared to fork out between from $9 to $20 a day.

Personal Liability Insurance

Car rental companies are required by law to specify the amount of liability insurance required. Be prepared to fork out anywhere from $7 to $14 a day should you decide to take up this coverage.

If you regularly rent cars and this is a steep sum to pay, it would also be wise to purchase a non-owner liability policy. This policy not only provides you with protection when you rent a car but also when you borrow someone else’s car.

Here are two important steps to take before deciding whether you need insurance coverage for your rented car.

Existing Auto Insurance Policy

Talk to your auto insurance policy company. Does your existing auto insurance policy cover your rented car and what amount does it cover? In most instances you would find that your existing policy covers your rental car, in which case you need not purchase a CDW.

What about personal liability insurance? Will it cover damage to other cars and passengers? If they do cover these areas, then you would not need the rental company’s personal liability insurance. But then if you’re renting a luxury car, your current auto policy may not sufficiently cover damage that occurs to it and you may want to consider additional coverage the rental company has to offer.

Credit Card Coverage

Before considering taking up insurance coverage for your rented car, check also with your credit card company as to what insurance coverage you’re already offered. What type of card do you hold? If you have a platinum card, you will most likely be offered more coverage than a gold card.

Depending on the credit card you have, you may be offered coverage for loss of a rented car, coverage for towing or loss of personal belongings. Coverage may not be offered for bodily injury or claims. To be on the safe side, ask for details of the coverage to be sent to you in writing.


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