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The Basics of Rental Car Insurance

Are you getting ready to rent a car for the first time? Or have you rented cars before, and always wondered what the whole “rental car insurance” thing is all about? Well, if you need answers to these questions, you’re in the right place. Below, we’ll tell you all about rental car insurance, its basic components, and we’ll answer some of your most frequently asked questions with respect to rental car insurance.

Q: What Is Rental Car Insurance?

The basic elements of rental car insurance are summarized in the following chart:
 

Type of Coverage What it Does How Much is It?
Loss Damage Waiver (LDW) Renter will not be responsible for damage to or theft of vehicle $9 to $30/day
SLP (Supplemental Liability Coverage) Provides up to $1 million in Liability coverage $7 to $15/day
PAI (Personal Accident Insurance) Provides medical and accidental death benefits if you are injured or people are killed in the accident $1 to $7/day
PEC (Personal Effects Coverage) Reimburses renter for the value of property stolen from rental vehicle $1 to $5/day
RAP (Roadside Assistance Protection) Renter is not financially responsible for chargable roadside incidents Varies

Together, these various policies can protect you from being financially responsible for damage you cause to the vehicle, theft of the vehicle, bodily injury to yourself, loss of property due to theft, financial liability if you cause an accident in the rented vehicle, or any roadside assistance incidentals (such as locking yourself out of the car, running out of gas, or needing the battery jumped). Most rental car agencies do not offer all of these policies together in one big bundle; in order to be completely covered, it’s up to you to pick and choose which options you would like to pay for, and which ones aren’t necessary.

Q: If I Already Have Rental Car Reimbursement Insurance on My Personal Auto Policy, Do I Need to Buy Rental Car Insurance?

You may still need to purchase rental car insurance, depending on the other coverages on your policy. Rental car reimbursement insurance is an optional form of coverage on most auto insurance policies which only pays out however much it costs to rent a car and get around while your personal vehicle is being repaired in the shop. It does not protect you from any liability, theft, or damage which may result from you driving that rental car.

However, if you’re curious as to whether the cost of rental car insurance will be reimbursed by your personal auto insurance company, you’ll have to contact your agent. Every company has different rules for how they manage their rental car reimbursement process, and how much you are entitled to be reimbursed for.

Q: My Credit Card Benefits Include Rental Car Insurance. That Means I Don’t Need to Purchase Any from the Rental Car Company, Right?

Not so fast. Your credit card company may or may not offer the same benefits that rental car insurance from the car company does. It is your responsibility as the driver to know which benefits your credit card company will provide, and which ones it won’t. Depending on the company whose card you’re using to rent the vehicle, you may be entitled to the following benefits:
 

Visa Amex Mastercard
Credit Cards All All Gold, Platinum, World and World Elite Cards
Limits $50,000 $50,000/$75,000 $50,000
Period 15/31 days 30 days 15 days
Deadline to submit claim 90 days 180 days 180 days

As you can see in the start, rental car insurance from your credit card is a bit limited. Some companies will only cover your rental vehicle for about two weeks, where’s others may extend coverage to a full month. And depending on what card company you are with will determine whether you have 3 months or 6 months to file a claim in the event of an accident. But if you are seriously injured, and you can’t get out of bed for several months (much less deal with the stress and hardship of dealing with an insurance company), you may lose your opportunity to submit your claim and receive compensation.

Before you go on your next trip, if you plan on relying upon your credit card’s rental car insurance to keep you safe, be sure and contact the company first. Make sure you’re clear on all of the benefits, then it’s, restrictions, and any other fine print details that you may not be aware of. Knowing this information can help you make an intelligent decision about what rental car insurance do you need.

Q: Can I Add Rental Car Insurance Supplement Coverage to My Current Auto Policy?

Since renting a car isn’t something most people do very often, it’s rare to find a car insurance company that will add that sort of supplemental coverage to your monthly premiums. On the other hand, you can contact your insurer and ask them if they offer temporary rental car insurance. This is a stand-alone policy that protects you in the event that something happens while you’re driving that rental car.

These policies are usually very cheap – most drivers can get them for less than $15 per car rental – and it should cover you from the moment you pick up the keys until the day you drop the car back off at the rental company. Just make sure the insurance agent you talk to clearly outlines any benefits, limitations, and deadlines associated with your policy before you decide to buy.

Q: Do I Really Need Personal Effects Coverage?

That depends on a few different factors. For starters, it depends on whether or not you plan on keeping personal property in the rental car while you are driving it around. It also depends on the cost of the personal property in question. Keep in mind, personal effects coverage doesn’t just protect you; it extends to any immediate family members that may be traveling with you.

Secondly, it depends on the replacement cost of your personal property. If you think your belongings will cost less than $2,000 to replace, then it may be worth purchasing this coverage. However, most rental car companies set a hard limit at $2,000. If you plan on carrying anything in the car with you that cost more than the dollar amount, you’re going to want to talk to your insurance agent or another insurance provider about securing that property. Lastly, be sure to ask the rental car company if there are any specific items which personal effects coverage will not reimburse you for. Expensive or exotic property may be deemed too much of a risk to be with insurance.

Q: Is a Loss Damage Waiver Worth the Money?

At the end of the day, it might actually not be. As you can see in the chart below, depending on how much your rental car company charges for their loss damage waiver per day, and how long you plan on renting the vehicle, your fee could range from anywhere to a meal for two at a nice restaurant to your collision deductible on an affordable auto insurance policy.
 

5 days 15 days 30 days
$10/day $50 $150 $300
$20/day $100 $300 $600
$30/day $150 $450 $900

If you can get other forms of protection – such as a temporary stand alone rental car insurance policy from your current auto insurance agent, or if your credit cards rental car insurance benefits cover damage or theft to your rental vehicle – that might be the cheaper option for you. Otherwise, you make it start paying a pretty penny just to keep your peace of mind while you are driving your rental vehicle around.

Q: Is Supplemental Liability Coverage Mandatory?

In most cases, no. But if you are renting car because you do not own your own vehicle (and, therefore, don’t currently have an active auto insurance policy), then your rental car company will require you to purchase his coverage.

Even though it is optional for the majority of people who rent vehicles, it may still be a good idea to purchase personal accident insurance under certain circumstances. If you get into a serious accident while renting a car, personal accident insurance pays out on claims up to a total of $1 million dollars (although additional coverage is available from some companies). See if you have a very low coverage limit on your liability insurance, or if you’re traveling with people who don’t currently have their own health insurance, personal accident Insurance might be worth the money.

Q: Is Personal Accident Insurance Mandatory?

No, personal accident insurance is not mandatory. In fact, most drivers may not even need it. For the majority of motorists, the personal injury protection part of their auto insurance policy we’ll cover them, even if they’re injured while driving a rental vehicle. Other drivers can look to their private health insurance plan to help them pay for injuries and unexpected medical expenses.

However, if you do not currently have health insurance, if you have low limits on your personal injury protection coverage, or if you live in it state where PIP coverage is not required, you might want to consider personal accident insurance from your rental car company.

Rental car insurance can seem pretty confusing – in some ways even more confusing than regular car insurance – because of how many different parties are involved. Between your insurance company, your credit card, and the rental company, it’s difficult to know who is paying for what. On the other hand, getting a better price on your current car insurance policy couldn’t be simpler. Just let us know where you live, and our fast, free quote generator will do the rest of the work for you.

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