Rental Car Insurance: what a minefield!

How many times have you succumbed to the sales pitch and piled on extra insurance at the rental desk due to pure panic, indecision, or simply playing it safe? Probably more often than you/I'd dare to confess!

Here's a quick rundown of the various insurance types and how to secure extra coverage for less than the steep fees at the car hire pickup desk.

​NOTE: The links provided aren't affiliate links; they're simply handy resources.

 Rental Car Insurance Options Explained

Here are the main types of “insurance” that are typically offered:

Collision Damage Waiver (CDW):
This isn't insurance, but a waiver that reduces what you pay if the rental car is damaged or stolen. It's void if you break the rental agreement terms.

• Primarily covers damage to the rental car in the event of an accident or collision.
• Generally does not cover theft of the vehicle.

Loss Damage Waiver (LDW):
Again not insurance, but a waiver that limits your financial responsibility.

• Provides broader coverage than CDW, typically including both collision damage and theft of the vehicle.
• Essentially combines CDW with theft protection.

 
Rental companies often use Collision Damage Waiver (CDW) and Loss Damage Waiver (LDW) interchangeably, bundling coverages where LDW serves as an enhanced form of CDW.
 
Supplemental Liability Insurance (SLI):

SLI provides extra protection for third party claims of injury or property damage beyond the rental agreement standard coverage.

Here are its main features:

• Enhanced Coverage: It increases the amount of liability protection if you're held responsible for damages or injuries to someone else while operating the rental car.
• Third-Party Claims: SLI covers claims made by third parties for bodily injury or property damage up to the policy's limit.
• Asset Protection: This insurance can protect your personal assets from being used to cover costs in a lawsuit if the damages exceed your rental agreement's basic liability coverage.
• Peace of Mind: It offers reassurance that you're better protected financially in case of an accident, particularly in situations with significant damages or injuries.

 
Personal Accident Insurance (PAI):
    Provides cover for medical expenses and accidental death benefits to you and your passengers while riding in the rental vehicle.
This is normally unnecessary as your travel insurance should already have ample medical coverage.
 
Personal Effects Coverage (PEC):
    Protects against the theft of personal items inside the rental car. This is often bundled with PAI.
Again, this may be redundant if you have a comprehensive travel insurance policy or it may even be covered under your home insurance.

Things to Consider:

• Securing comprehensive car insurance can be costly, so book rental cars early to find potential deals offering complete coverage at competitive rates.

 

• Driving an unfamiliar vehicle in a strange place can make a collision more likely. Without the right insurance, you could wind up paying for damages and injuries from your own pocket. So, make sure you have adequate coverage.

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• Local Policies: Rental insurance requirements can vary significantly by region or country, so ensure you understand what is mandatory and optional. All mandatory requirements should be included in your rental fee, but always check!

 

• Credit Card Benefits: Some credit cards offer rental car insurance as a perk. However, these policies often come with restrictions (e.g., specific rental durations, vehicle types) often has a long list of exclusions, such as damage caused by additional drivers, lost keys, roadside repair costs and tend to be secondary insurance, meaning they only cover expenses after your primary insurance has paid out.

 

• Check Your Existing Insurance: Your personal auto insurance policy might extend coverage to rental vehicles. Contact your insurer to confirm the details and whether it includes coverage for damage.

Top Up Insurance Options:
Rental car protection options are available from other providers and are nearly always much cheaper than that offered at pick up:

• Within some provinces of Canada, top up insurance is available for very reasonable rates from your local public insurer, but this is generally only for Canadian and US rentals.
• RentalCover.com
• Allianz Travel
• Also check out companies that offer general travel insurance as they either offer add on/ stand alone car rental policies (eg. TuGo)

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Take just ten minutes to do some research before picking up your hire car and you'll dodge panic decisions. Get to grips with CDW, LDW, and other insurance options, and see if your current policies have you covered. This little effort means less stress and more money in your pocket at the rental desk.

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