Do you dread standing at the rental car counter, unsure of which insurance you should buy and which you can decline? Here's a handy cheat sheet to take some of the stress out of renting a car.
Know If You Are Already Covered
The first thing to figure out about car rental insurance is whether you are already covered. That will largely depend on: (a) whether you're renting for business or leisure; (b) whether you own a car and have personal auto insurance; (b) which credit card you intend on using to pay for the rental.
Traveling for business? Find out if your employer provides some company coverage. Government employees, including military and postal service workers, are typically covered when traveling for business. Always check before getting to the rental car counter.
Know The Four Main Types of Car Rental Insurance
1. Collision Damage Waiver (CDW): Often called Loss Damage Waiver (LDW), this is arguably the most important kind of coverage. It states that the rental car company will waive some or all of the fees if the rental car is damaged or stolen.
Note that, even if you opt for the CDW, there are situations that will void the coverage. For example, if the vehicle is damaged due to reckless driving or while being driven by someone not listed on the agreement, you're out of luck.
Do you own a car? Your personal auto insurance is likely to include primary coverage for car rentals. Many credit cards offer secondary coverage. This means that if you were in an accident, your auto insurance would kick in first. Once your deductible is hit, the auto insurance company would pay out up to the limit of your coverage. Any remaining expenses would then get paid by the insurance benefit offered by your credit card.
Don't own a car? Your credit card may become your primary insurance provider, though there may be limitations to what is covered. Always check to see what is covered as a travel benefit. Note that Citibank recently announced it will be ending the car rental insurance perk for virtually all of its cards.
2. Personal Accident Insurance (PAI): is the coverage for accidental death and emergency medical expense benefits to the renter and all passengers in the rental car. PAI is typically lumped together with another product called Personal Effects Coverage (PEC), which can bring the total additional cost to $5-11 per day, depending on where you are renting, plus taxes and fees.
Do you have health insurance and life insurance? If so, you are likely covered in the US. Before traveling abroad, you would need to purchase separate travel insurance.
3. Personal Effects Coverage (PEC): This covers the theft of possessions from a vehicle that you are renting, up to a certain amount.
Do you have homeowner's or renter's insurance? Most people will not need to purchase this insurance, as their personal insurance likely covers most travelers. However, if you're traveling with high-value items, you may want to consider your options.
4. Supplemental Liability Protection (SLP): In the event of an accident where you are at fault, this insurance provides coverage (typically up to $1 million) in the event of bodily injury or property damage to someone other than the renter and passengers in the rented vehicle.
Do you have personal auto insurance?In most states, the rental company must provide state minimum coverage by law, so you usually don't need to buy any extra coverage to meet legal requirements. If you have a personal auto insurance policy, it should also cover you when you operate a rental vehicle, so buying SLI is likely not necessary. If you don't have your own car insurance or, for whatever reason, you don't want to risk having to file a claim, then it may be a good idea to get SLI.