Do I Need Insurance for my Rental Car? Here are the Facts.

Summer equals vacation, and vacation can often mean renting a car.  Before you head off to paradise, ensure you are protected in case of an auto accident.  If you are not sure what to do, then here’s what you need to know about personal and rental car coverage.

What does my personal insurance cover?

Whether or not you need to secure coverage through the car rental company depends on the specifics of your personal auto policy.  In many cases, car insurance policies will extend coverage to rental vehicles.  For instance, if your personal policy includes comprehensive and liability insurance, then this coverage will likely apply to rental cars as well.

However, keep in mind that the value of the rental car will impact your coverage.  If you are planning on renting a luxury vehicle or a car that’s worth more than your personal vehicle, then your existing insurance will not be adequate.  In this case, you should supplement your existing coverage with the insurance offered by the rental company.

What does rental car insurance cover?

If you want to secure additional coverage through the rental car company, then it’s important that you understand the types of coverage that they offer.  Typically, car rental companies offer four main types of coverage: liability, personal accident insurance, Collision Damage Waiver (CDW)/Loss Damage Waiver, and personal effects coverage.

• Liability- Covers the cost of third-party injuries or property damage that you may be responsible for. As your personal auto policy already offers liability insurance, you probably do not need to secure this coverage from your car rental company.
• Personal accident insurance- Covers your medical expenses should you be injured in an accident. If you have personal injury protection or medical payments on your existing auto policy, then you do not need to secure this coverage from your car rental company.
• Collision Damage Waiver (CDW)/Loss Damage Waiver- Rather than an insurance product, this waiver transfers financial responsibility from you to the car rental company in the event that the rental car is damaged or stolen. If you are renting a car, then it’s recommended to secure this waiver.
• Personal effects coverage- Covers the personal items that are stolen out of your rental car. Before you secure this coverage from your car rental company, review your homeowners, renters, or condo insurance policy.  In some cases, these policies will offer coverage for items stolen out of your rental car.