I used to think that renting cars (for myself or clients) was super easy. Book online, show up at the counter, get the keys, and leave. But more and more recently I’m hearing horror stories of overly-pushy upsells, contradicting stories of “mandatory insurance,” and altogether negative experiences.
This is partially due to the fact that every rental car company at every office in every country is different. But, there is some knowledge that we can have in our back pocket to help avoid these negative experiences.
And thus, we get to….
THE TRUTH OF RENTAL CAR INSURANCE
TRUE: you do need to be covered by some sort of insurance before renting a car.
FALSE: you do not need to purchase their insurance (except in Italy and Ireland).
The misleading tale told by rental car companies is that you need more insurance than what you already have or that you have to buy their insurance. [[[and let’s stop right here: almost NO ONE can recite their insurance policy’s coverage on rental cars. especially not after a 12 hour flight to a different country, so we’re already walking in with a weak defense]]].
The best way to combat these confusing situations is to…
1) Know what coverage you already have (bonus points if you print it out and bring it!). You are most likely covered in some way by your credit card company, personal auto-owners insurance, umbrella policies, homeowners insurance, or health insurance, especially if you are renting within the United States or Canada.
2) if there are any exceptions in the country you are going to.
The four types of insurance below are what you are going to be confronted with when renting a car. Each of these is very likely to also be covered by some sort of insurance you already have (but in some cases not, so read!!).
If you’ve already glazed over, jump to the TL;DR at the end.
FOUR COMMON INSURANCE OPTIONS & HOW YOU MIGHT BE COVERED
- Collision Damage Waiver (CDW)
- What the h*ck is this? This is the most important to know of the four, in my opinion. A CDW is waiver you pay for and sign that says the car rental company will waive all or part of its cost if the rental car is damaged or stolen. This one is a good one to have as it basically lets you walk away free of a lot of hassle & paperwork if something is to happen.
- How could I be covered? If you’re renting in the USA, Canada, or parts of Mexico and have auto-owners insurance on your personal vehicle or a premium credit card, you are probably already covered. (If a credit card, make sure you make the booking with that specific one).
- If you are not: I would recommend purchasing this type of coverage either through the rental agency (if it covers the whole car) or through a company like Allianz who has a bumper-to-bumper Rental Car Damage Protector for $9/day and 24/7 customer service (I’m not sponsored by them, I just love them).
- AKA: Loss Damage Waiver (LDW) or Physical Damage Waiver (PDW)
- Cost: $9-$12 extra per day
- Supplemental Liability Protection (SLP)
- What the h*ck is this? This covers damage done to other people’s property or cars.
- Could I be covered? A lot of rental car companies, especially in Europe, include this as part of your rental fee – they’ll list this in the fine print, so glance over the Terms & Conditions. It is worth the extra few minutes of reading to save $10/day. Additionally, if you’re renting in the USA, Canada, or parts of Mexico, your auto-insurance (if applicable) probably covers this the same as it does your own.
- If you are not: Then you are probably in a country outside of the USA or Europe and I would consider adding on (because eeek, the cost if something did go wrong).
- AKA: Liability Insurance Supplement (LIS) or Supplemental Liability Insurance (SLI).
- Cost: $10 extra per day
- Personal Accident Insurance (PAI)
- What the h*ck is this? This insurance provides medical, ambulance, and death benefits for the renter and passengers of the rental car in the event of an accident.
- Could I be covered? If you have health insurance or auto-owners insurance, this one is going to be largely redundant.
- If you are not: If this is something you’re not already covered by and you are concerned with medical, ambulance, needs, etc., I recommend looking at an overall trip insurance plan and decline it just for the rental car. (see: www.insuremytrip.com for kind of a marketplace of different travel insurance needs).
- Cost: $2 extra per day
- Personal Effects Coverage (PEC)
- What the h*ck is this? This covers if someone gets in your rental car and steals your personal belongings.
- Could I be covered? This benefit is usually covered by a renter’s or homeowner’s insurance policy, if you’ve got one of those. It is likely this insurance would pay off a little bit more than your usual one, BUT…
- If you are not: I would waive this insurance, and just make sure to never leave any valuables in your car while traveling.
- Cost: $2 extra per day
CALL TO ACTION (BEFORE BOOKING)
Call your insurance providers in the following categories and ask for their most up-to-date policies on your plan. Pro tip: ask them to describe it in laymen’s terms while you’re on the phone so you don’t have to decode the policy later. Ask for any exceptions (i.e., what countries or scenarios are not covered). WRITE THIS DOWN. You don’t want to have to go through this whole thing more than once!
- Auto-Owners Insurance (for rental car liability coverage domestic & abroad)
- Homeowners Insurance or Renter’s Insurance (for stolen items coverage)
- Your Credit Card Companies (for rental car liability coverage domestic & abroad)
TL;DR: If you are not currently insured in any overlapping form, purchase a Collision Damage Waiver through the rental company or purchase a Rental Car Damage Protector Plan through an insurance company to cover your trip (Allianz offers it for $9/day and has 24/7 customer service: Allianz Rental Car Damage Protector). When in doubt, the Collision Damage Waiver (CDW) will likely make everyone feel better.
Your travel advocate,