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Do You Need Rental Car Insurance?


Summer weather can mean family vacations and road trips. Summer is also the busiest season for rental car companies. When they ask if you would like to purchase rental car insurance, do you know if you should? We have put together some tips to help identify what coverage you need to purchase and what coverage you can pass on.

Collision/Loss Damage Waiver (CDW or LDW)

This coverage is typically the most expensive coverage offered by the rental car company. It typically costs anywhere from $10-$30 a day and provides coverage for the physical damage of your rental car. If you have comprehensive and collision coverage on your primary auto insurance policy, this coverage will extend to your rental car. However, it is important to know that, if the rental car is out of commission for a few weeks, the rental car company could assess you for their loss of profits or diminished value of the vehicle itself. Many auto insurance policies do not provide loss of profits or diminished value coverages for rentals on their policy. It is important to check with your insurance advisor to see if your policy does before waiving this coverage.

Liability or Supplemental Liability Insurance

Liability insurance provided by the rental car company will cover you if you cause damage to other vehicles, people, or property in your rental. If you carry auto insurance and have adequate liability limits, your liability coverage will extend to your rental car. At a cost of another $10 per day, it is safe to say that you can pass on this coverage. If you do not carry an auto policy or have low liability limits, we recommend purchasing this coverage from the rental car company.

Personal Accident Insurance

This insurance is typically $5 per day and provides medical coverage for you and your passengers if you are injured in a crash in your rental car. If you carry medical payments coverage and you and your passengers are insured on a health insurance policy, you can pass on this coverage.

Personal Effects Coverage

For another $5 per day, you can purchase coverage for any of your personal belongings stolen or damaged in your rental car. If you carry a renters or home insurance policy, your personal property coverage from that policy will generally extend to your rental car. However, it will be subject to your deductible, which typically ranges anywhere from $500-$1000. If you already have home or renters coverage elsewhere, you can likely waive this coverage, too.

Rental car insurance can be tricky and costly if you do not know the coverage gaps and duplicated insurance coverage that may already be available to you. It is also important to remember that if you are traveling outside of the United States, your auto insurance policy may not cover you. If you plan on renting a car soon and have questions on your coverage, please contact a trusted insurance advisor at Evarts Tremaine today.

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