Photo by Old Shoe Woman /CC

Written by Maak

You know the story. Standing at the car rental counter, tired after your trip, you are asked whether you’ll be taking additional insurance. Do you take it, or do you decline, assuming your own auto insurance or credit card will cover any damage.

You may be one of those that ends up taking the extra insurance to make sure you are covered - often from not knowing what the car insurance covers while renting a vehicle and concerns about being inadequately insured. Instead of waiting until you get to the counter, it's a good idea to check into your existing coverage BEFORE you travel. By checking before leaving, you'll get:
- Peace of mind – you don’t want to spending your holiday with a nagging concern as to whether you did the right thing
- Savings – holidays are expensive enough without paying for insurance that you already have
- Correct coverage - most rental car companies will hold you fully responsible for your rental vehicle if damaged or stolen, therefore you must know how you are insured.

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Even though you are covered via your auto insurance, you may still want to take the car rental insurance. Some people take it so that if they do have an accident, their regular car insurance won't be impacted.
   
To help you do your homework before leaving home, here is some information about the most typical types of insurances that are offered by the car rental companies.

CDW (collision damage waiver) and LDW (loss and damage waiver)

If a rental car is damaged, the renter may be responsible for the first several hundred dollars of damage (the deductible) up to the full price of the car. By purchasing CDW (also known as Loss Damage Waiver or LDW), the renter is released from responsibility of any loss or damage to a vehicle up to the full value of the car. However, if the renter is in violation of the rental agreement, the waiver is void.
Especially in the US and Canada, some credit card companies offer CDW/LDW insurance as a cardholder benefit for a limited period (e.g. 30 days). Likewise many personal auto insurances cover this, so it is certainly worthwhile checking with your insurance and credit card companies.


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SLI (supplemental liability insurance) or ALI (additional liability insurance)

This optional insurance protects the renter and other authorized drivers of the car against claims made by third parties for bodily injury/death and property damage caused by the use or operation of the rental vehicle. In most countries, the rental agency will automatically give you liability coverage that's equal to that countries minimum. However, those limits usually are low and can easily be exceeded in an accident, so this coverage gives you added protection.

Check with your own auto insurance policy to determine whether additional excess coverage is already provided.

PAI (personal accident insurance)

This provides a one-time payment for you or a passenger in case of death or maiming from a car accident. This is generally covered under your auto or health policies. Check your personal car insurance policy to see if it covers car rentals. If your policy covers car rentals, you may not need PAI. This insurance is usually optional.

PEC (personal effects coverage)

This coverage provides protection against loss or theft of personal belongings from the rental car. Once again, check your own auto or home owner insurance policy to determine whether your coverage includes rental cars.


Photo by waywuwei /CC

My advice is therefore, before renting a car:

• Ask your insurance company whether your car or home-owner insurance covers any of the above insurances – also when abroad. Check what the impact will be on your premium if you are involved in an accident when renting a car.
• Check your credit card company whether they provide any coverage
• If neither offer adequate coverage, check whether your insurance company can offer coverage through your current policies, and if so see whether the cost is comparative to paying the rental company
• Ask the rental company whether they have any deals where insurance is included in the rate – often the rental companies include insurance in some of the larger cars, but it could work out comparable to an economy car.
• Check some of the car rental consolidator sites – often they bundle the insurance into a “Gold” price that can be very attractive when compared to renting directly from the car rental companies.

Whatever you decide, make sure you are adequately insured before sitting at the wheel, inadequate or under insurance can have grave personal and economic consequences if you are unfortunate enough to be involved in an accident.