by Michelle Ferris on Apr 07, 2015
Due to rental car contracts, there is no black and white answer to whether you need rental car insurance or whether your own car insurance will cover you. The short answer is that we generally advise our clients to buy the rental car insurance.
Does My Car Insurance Policy Cover a Rental Car?
All this sounds like your car insurance might work as rental car insurance, doesn't it? So why do we recommend that you spend vacation dollars on rental car insurance?
Because we don’t want your vacation spoiled by delayed travel or a surprise charge to your credit card due to “traps” in the rental car contract!
You have the option to purchase a “Loss Damage Waiver” (LDW) from the rental car company. If purchased, this waiver relieves you from financial liability for the loss of, or damage to, the rental car, parts, and accessories that come with it.
Purchasing an “LDW” is generally a good idea, because:
If you decide to buy the “LDW,” be sure to read the fine print. There are likely to be some exclusions:
Another common question is whether credit cards provide rental car insurance.
Our answer? Maybe.
Some of the premium credit cards (Gold and Platinum, etc.) do offer rental car insurance. Contracts vary from card to card, so call your credit card company to find out exactly what's covered. Some cards may only provide secondary or excess coverage, requiring you to file a claim with your own car insurance before the credit card coverage applies.
Our recommendation is not to rely on car insurance coverage through your credit card unless you’ve researched this issue thoroughly.
When you rent a vehicle, ask them for an advance copy of the rental agreement in order to determine your contractual obligations for damage. A few rental car companies post this on their website. Also, be sure to inspect the vehicle for damage, inside and out, before signing anything.
Finally, keep in mind that your personal car insurance policy will only extend protection in the United States and sometimes in Canada or Mexico, depending on the car insurance company and policy you've chosen. If you plan on renting a car in Europe, Asia, or South America, your car insurance policy will not extend, and is limited at best in the U.S. Territories. In that case, it is best to purchase maximum limits of liability, in addition to collision and comprehensive coverage, directly from the rental car company.
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