While you may not be one of the brave souls that rent their very own cars over to strangers through the myriad car sharing companies available for such options, odds are, at some point in your life, you’ll should rent an automobile from an agency on account of business travel or pleasure pursuits.
However, don’t discount these peer-to-peer services. They often offer rates that are reduced than rental agencies, and quite often, insurance is included as part of agreement. However, many of us rent from agencies which may have cars available for pickup at the airport, so these are the kinds of rentals we’ll be looking at in this article. Let’s start by exploring the “insurance” products offered by the rental companies.
WHEN “INSURANCE” IS NOT INSURANCE
When it comes to the exact process of renting a car, it’s likely you may feel overwhelmed by the variety of products and terms used by the rental agent, and they’re often confusing, since most of them are not true insurance policies. Rather, the products being hawked by the agent simply pass financial responsibility for the car to the rental company in case there is damage or theft of your rental car.
The three most popular types of coverage that can be purchased include:
Collision Damage Waiver (CDW): This is certainly also referred to as a Loss Damage Waiver (LDW). It passes on financial responsibility to the car to the rental company, meaning they’ll pay for damages to the rented vehicle in case of a collision. Pay close attention to the fine print, as every rental car company has its own guidelines that renters are required to follow.
Personal Accident Insurance (PAI): If they are in an accident, the rental car provider are going to pay a death benefit or some of the renter’s medical expenses.
Personal Effects Coverage (PEC): The provider will pay for personal possessions, like luggage, just in case they are damaged while driving.
The CDW/LDW normally covers all of the potential costs associated with a rental car, including reduction in revenue on the rental company if the automobile is damaged or totaled, and normally, they relieve a renter of any further financial responsibility to the renter.
We caution that there are significant terms and qualifiers attached to these products, a few of which can void them if a renter violates any of them during the rental. Or allow a person not listed on the rental contract to drive the car, so be sure you’re in compliance with the small print, if you drive under the influence of alcohol or drugs.
YOU MAY ALREADY HAVE SUFFICIENT COVERAGE
While you really should purchase one of several options made available from the rental company, it’s possible you could already have rental coverage inside your car insurance policy. For example, in Minnesota, every auto insurance policy has to include a minimum of $35,000 in coverage for injury to rental car.
And even if you’re not much of a resident from the Land of Ten Thousand Lakes, you almost certainly have coverage for a non-owned car, so check your policy. In many situations, your existing bodily injury and property damage liability will be extended to protect any rented vehicle.
Every insurer is unique and you will have to check along with them for the exact amount of coverage that might be carried over to a rental car, however. When your insurance policy will offer you sufficient coverage for your unique situation, call your agent or your insurance carrier to see.
And since you’ll probably pay for the rental car with credit cards, since it’s easier and safer than carrying cash, not to mention a possible discount, you’ll want to see when your credit card company offers any rental car insurance. Again, there are limits to the coverage, and many of them are optional features. The issuer of the credit card should certainly provide you with details on what is and what is not covered, in creating, before you accept to purchase any optional coverages.
Finally, when you don’t have an insurance company because you don’t usually drive and don’t own a car, not unusual in areas with abundant public transportation, then you’d probably want to purchase a non-owner insurance plan.
