Buying Auto Insurance from Rental Car Companies

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Should I Buy a Loss Damage Waiver (LDW)?

Despite providing protection similar to that offered by comprehensive and collision coverage, an LDW is not insurance. Rather, it is a contractual agreement that waives the renter’s financial liability if their rental car is vandalized, stolen or damaged in an accident. An LDW may also be called a collision damage waiver (CDW) or an excess damage waiver (EDW).

You should purchase an LDW/CDW/EDW if:

You should decline an LDW if you already have collision and comprehensive coverage on a car of similar value to your rental vehicle, or if the credit card you’re using to pay for your rental vehicle already offers an LDW. However, if you’ve already filed a claim in the past year, filing a second claim may cause your insurance rates to increase significantly. In this case, it may be worth paying the small fee for an LDW before driving a new car in an area you’re not familiar with.

Should I Buy Supplemental Liability Coverage (SLC)?

Every state requires you to prove a minimum amount of financial responsibility before operating a vehicle. Usually drivers prove this responsibility by obtaining liability insurance. Liability insurance covers the medical and repair costs of other individuals if you cause an accident.

You should purchase SLC if:

If you don’t already carry a car insurance policy or another form of financial responsibility, you’re legally obligated to purchase liability coverage before you operate your rental vehicle. Additionally, you might want to purchase supplemental coverage if your own policy is subject to low limits. For example, Louisiana drivers are only required to carry $15,000 of bodily injury liability insurance per person and $30,000 per accident. If a driver from Louisiana rents a car in a state with higher minimum liability requirements, their own coverage might not be enough to legally enable them to drive.

Also, if you cause an accident and injure multiple people, the medical costs from that accident could easily exceed the limit of your personal policy. In these cases, SLC would provide vital additional protection, typically up to $1 million in medical fees.

However, you may decline SLC if you carry an auto insurance policy with bodily liability insurance that meets the requirements of the state in which you are driving.

Should I Buy Personal Accident Insurance (PAI)?

Personal accident insurance covers the medical costs of you or your passengers in the event you cause an accident. If you carry an auto insurance policy, you may already have personal injury protection (PIP) or MedPay insurance. In addition, you likely have health insurance. Each of these forms of insurance will provide coverage similar to what you would obtain under your car rental company’s PAI. However, some health insurance policies exclude vehicle-related accidents, so you should verify your coverage under your health insurance policy if you don’t have PIP or MedPay insurance.

You may need to purchase PAI if:

Should I Buy Personal Effects Coverage (PEC)?

Personal effects coverage insures your luggage and other personal belongings that you and your immediate family have brought with you on your trip. However, if you carry homeowners or renters insurance, your belongings are likely already covered, even in your rental vehicle. Because of this, most renters should decline PEC.

You should purchase PEC if:

It should be noted that some items are typically excluded from PEC. These may include:

Rental Car Insurance Through Your Credit Card

Certain credit cards issued by American Express, Visa and Mastercard offer free LDW coverage when you rent a vehicle. In order to qualify for the coverage, you must be the named cardmember and you must pay for the entire rental using that card. Additionally, you must decline the LDW/CDW offered by the car rental company. Here are limits and stipulations each card declares: