Car Rental Insurances: What Are the Options and Do You Need Them?

 
Anyone renting an automobile is familiar with offers of car insurance to cover various losses that may occur during the car rental period. The insurance coverage is charged on a per day basis through the rental period. Optional coverage can range from $3.00 to $4.00 per day, to over $30.00 per day, depending on what is covered. This article will explain the basic types of insurance offered by the rental company, as well as other sources of insurance available to the renter.

Collision Damage Waiver (CDW)

 
This is the most expensive coverage offered by the rental company. It covers physical damage to the vehicle during the rental period. In the event the vehicle suffers physical damage due to accident or natural occurrences such as storm or hail damage. It ranges between $20 and $30.00 per day during the rental period. Renting a vehicle for 10 days and accepting the CDW can add $300.00 to the rental cost.

Other Sources: If the renter owns a vehicle and carries collision damage to the vehicle, there is a good chance that it will cover the rental vehicle. If the renter carries liability only, damage to the vehicle will not be covered. Any prospective renter should check with their vehicle insurance carrier to verify their policy contents.

In addition, if the renter pays for the vehicle rental with a major credit card, there is a good chance the card provides a collision reimbursement benefit. The coverage will normally pay up to the cash value of the vehicle rented. To activate the coverage, the renter should decline the CDW on the rental agreement and then must pay for the rental agreement in full through the credit card. Note that the coverage through the credit card will not pay for medical expenses or personal injury or liability due to an accident.

Liability Insurance

 
This type of insurance covers medical expenses, legal fees and any liability from a civil judgment if involved in an accident that was caused by you. It is not as expensive as CDW, but can still be as high as $10 to $15 per day.

Other sources: If the renter owns a vehicle that is presently insured. The car insurance policy will cover the rental. If a person does not own a vehicle and or it is not presently insured, the renter will have no insurance for these losses and should purchase the rental company’s policy.

Vandalism/Theft

 
Some rental companies offer this as a part of the CDW, others offer it separately. If separate, it is normally $4 to $5 per day, and covers theft or vandalism of the vehicle.

Other sources: A renter’s own car insurance policy may cover this loss if they have comprehensive coverage. Some major credit cards include vandalism and theft loss as a part of their coverage. In either case, the renter should check with their auto insurance and credit card coverage to determine if they are covered.

Road Side Assistance

 
This covers the cost of towing a disabled vehicle, usually to the nearest town or repair shop. It may also cover the cost of fixing a flat tire, a jump start or other type of assistance. It is usually the least costly form of insurance.

Other sources: The renter’s auto insurance policy may cover for roadside assistance if the option was selected by the insured. In addition, auto clubs, such as AAA, may cover for this assistance.

In all cases, the renter should determine the other sources available to them, by checking their vehicle policy, their credit card coverage and their auto club. They should also determine exclusions. For instance, many credit cards will not cover loss of a rented full size pick up or commercial vehicle. In all cases, the insurance will only provide coverage when the vehicle is operated by the renter and authorized users on the rental agreement.

Disclaimer: This is for information purposes only and NOT a recommendation from Mills Insurance. Please contact a licensed insurance agent specialist to discuss insurance coverage’s and laws.