Is Car Rental Insurance Necessary?
Anyone who has rented a car has had to run the gauntlet of additional coverages at the rental counter. These various types of coverage typically come with confusing names made up of initials and warnings of dire consequences if they are refused, but they also usually carry a hefty price tag, which can double the cost of renting a car. In many cases, though, they are unnecessary.
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Types of Car Rental Insurance
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The best known additional car coverages are CDW and LDW. These coverages provide a collision and loss damage waiver, allowing you to walk away from responsibility from the car if it is stolen, vandalized or damaged in an accident. Another type of insurance is a liability policy (ALI), which covers you from liability for any damage that you may cause to other parties in an accident. PAI and PEC offer you personal accident insurance, covering you against your cost of medical payments or death, and personal effects coverage, offering your property protection while it is in the rental car.
What It Costs
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These coverages can be expensive. As an example, a one day midweek rental from a major national car rental agency at Minneapolis carries charges of $27.99 for LDW/CDW coverage, $14.15 for ALI coverage, $2.95 for PEP and $4 for PAI. In fact, these charges add up to $49.09 additional on a rental base rate of $111.99. A three-day weekend rental of a midsize car from a national discount rental car agency in San Diego carries an advance booking base rate of $20.95 per day. There, the combination of its LDW and ALI-equivalent coverage actually costs more than the rental at $27.94 per day. These fees are as of 2010.
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Alternatives to Car Rental Insurance Products
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Most car rental insurance policies duplicate your existing car insurance, especially if you have collision and comprehensive coverage. Although your policy is subject to deductibles, especially if you are a good driver, you can save a great deal of money by using your car insurance and opting out of the rental coverage. In addition, many credit cards, especially higher end cards like American Express, Visa Signature and Mastercard Premium, offer their own CDW coverage, which works in concert with your car insurance to eliminate deductibles if you wreck a rental car.
When Rental Car Insurance Is a Good Idea
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Although in most states, rental agencies will furnish you with a car with coverage that meets the state's minimum coverage for liability, you should consider purchasing coverage if you have no car insurance of your own. In addition, if you do not carry collision and comprehensive insurance, buying the CDW/LDW can be a good idea. The coverage also makes sense if you are renting a car whose value is above that of your policy's max, such as a luxury car. In all of these cases, though, you may find it more affordable to either purchase a non-owner automobile insurance policy or upgrade your own policy, especially if you rent cars frequently.
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References
- Photo Credit Crash on the street. German auto model 2007. image by Dariusz Kopestynski from Fotolia.com
