Most of us have been there before. We make all the proper arrangements for our trip, which sites to visit, booked the hotel with the right room package. We even have picked just the right car for that road trip that we need to rent. When the days comes everything seem to work out just fine until you set foot in the car rental agency wanting to pick up the keys to that rental car. When the final bill comes and we have picked the most comprehensive insurance package, we are shocked that the price of the rental car suddenly doubled. Looking through the details, you find that it is the car insurance that is doubling the rental costs. It is quite normal for people to get very aggravated and even shocked that something like the insurance for their rental car can cost so much. In this article it is our hope that we can bring to light some common ways to first arrest the rental car insurance costs and also to look at ways to reduce them substantially.
In order to full understand rental car insurance, we need to know the different types that are available to us. Below we will list the commonly available coverage types.
CDW (Collision Damage Waiver), LDW (Loss Damage Waiver), PDW (Physical Damage Waiver) It is the most basic of rental car insurance coverage that you need. Basically, if you cause an accident an anything happens to the car, you don’t need to pay for the damage. There are however limitations. The limitations will be set by the policy and are normally things like mileage, distance from city or even if you were caught drunk driving.
LIS (Liability Insurance Supplement) This is addition cover to what is already available in your CDW, LDW and PDW. This is the extra bit that most people opt for. It covers extra third party damage that might occur in an accident.
PAI (Personal Accident Insurance or Coverage) This coverage option takes care of the passengers of the ill fated rental car that got into the accident. It will take care of whatever costs from the maiming that requires hospitalization.
PEC (Personal Effects Coverage) or Personal Property Insurance This is the least important of all the coverage options that we have listed above. It covers whatever personal belongings that you have in the rental car if it should be lost in an accident of a break-in.
Above we have listed the standard rental car insurance coverage from the most basic at the top to the extras at the bottom. Generally, the most basic coverage items that you must have are a combination of CDWs and LISs. This will basically cover you from any damage that you do if you were in an accident but minus whatever costs incurred to you, your passengers and your belongings.
One thing that many people don’t know is that if they have comprehensive car insurance for their car, it might even be comprehensive enough to cover the CDW and LIS needs of your rental car. What this means is you might actually be covered right from the get go from your own car insurance. This is a situation that happens more often than you think. It is however vital that you check with you current insurance provider to see if your policy extends to rental cars. Never get a rental car assuming that you already have rental car insurance from your own comprehensive coverage. There are times when your policy changes from year to year and your rental coverage may change without you knowing.
Sometimes you might not only be covered by your comprehensive plan but sometimes even your credit card too. This is especially true for higher end “gold” or “platinum” offerings. These cards normally have some sort of personal property protection package built in and as such will already work as an PEC insurance coverage. As with its availability, it will also be very wise to check with your credit card provider. Again it is very dangerous to assume you are already covered.
The right way to approach this is to actually confirm with your insurer and credit card company as a part of your pre-travel activities. This checking will confirm whatever coverage that you have inherently so you don’t need to double up your rental car insurance. Naturally, paying for the extra insurance at the rental car agency isn’t necessarily the smartest thing either. Doubling up your insurance means you’ll be paying double for a set coverage amount. It is law that you can’t profit from insurance.
It should also be noted that if you opt to get insurance from the rental car agency that it will actually cost more than what you can get from your own car insurance company or as provided by the credit card. It isn’t abnormal to find that rental car agencies will charge almost double for the insurance coverage. This is a part of their profit model to catch customers with no insurance so they are forced to get it or not get the rental car.
Rental car insurance is certainly needed however you don’t need to get it from the rental car agency. Most rental car agencies sell insurance as a side-income and are certainly trying their best to make you part with more money than you are comfortable with. It would be prudent to first check that you aren’t covered and only rely on the rental car agency insurance products as a last choice.
Follow Ryan Parker in his quest to demystify the world of car insurance for everyone. Not everyone thinks he is packing a full deck but he certainly provides information that is very useful. Have a look at what he has to say about rental car insurance.