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Detailed Explanation of the Various Types of Rental Car Insurance

Types of Rental Car Insurance
If you are planning to rent a car, you should know the right type of rental car insurance policy that will provide coverage. By knowing your options, you will be able to forestall squandering money or buying redundant coverage.
Madhushree Kelkar
Last Updated: Mar 19, 2018
Did You Know?
Many credit card companies often offer free or minimal cost rental car insurance. However, you may have to use your credit card to pay for the rental charges of the car for availing these benefits. As these benefits will differ from company to company, it is advisable that you check the rental car insurance policy with your credit card provider to find out about the coverage and terms.
Right when you are filling out the form for a car rental, the salesperson will persuade you to believe that you need a wide range of rental car insurances. He will make you believe how it is necessary for you to get maximum coverage. However, most of these insurances are extremely costly, and you hardly require all of them. Many times, your personal auto policy will cover most of your car rental insurance requirements. There are policies which cover car towing charges, loss, theft, and damage in your rental car to emergency medical expense coverage in case of an accident. Not only this, but a car rental policy provides accidental death benefits. Hence, it becomes all the more important that you know exactly which type of insurance coverage will be suitable for you. Here, WheelZine has explained the types of car rental policies in detail.
Loss Damage Waiver (LDW)/ Collision Damage Waiver (CDW)
Two drivers arguing accident
This is not a rental insurance coverage but a waiver which will help you out in case the rented car is damaged, stolen, or a theft occurs in the car. The reimbursement will also cover: (i) the repairing expenses; (ii) valid 'loss of use' cost for the rental car (as it will lose out on rent while the car is getting repaired); and (iii) 'diminished value' cost as the damaged car will fetch lesser resale value. Sometimes, it also covers the towing charges to the nearest repair center. They usually cost anywhere between $20 or above a day and are extremely costly. In most cases, your personal vehicle insurance will cover this loss; however, you should get these waivers if your policy has a limited liability.
Existing Auto Insurance Coverage
Car insurance claim form
In most cases, your existing personal vehicle insurance will cover you even when you are driving a rented car. You should check the details of your personal policy before going ahead and getting car rental insurance. In all probability, your personal auto insurance is already covering your car rental insurance needs. However, there may be certain limitations of caps to the policies. For example, there are policies which will not extend this coverage to rental cars. Most of the policies will cover you in the US and Canada, but not when you are traveling to any other country and have rented a car there. Some may extend collision coverage, while others may not offer the reimbursement for theft.
Supplemental Liability Insurance (SLI)
Liability insurance form
Sometimes also called Additional Liability Insurance (ALI), it is an optional policy, which may cost as good as half of your rental car cost. In most cases, public liability and property damage will be provided by your car rental. The car rental company will provide you Financial Responsibility Limits when you buy an SLI/ALI. Some states provide basic coverage if you have an insurance policy for your own car. But you can opt for this policy if you do not have that coverage or it is not sufficient enough. Just imagine a scenario when you are vacationing in some other state and meet with an accident with another car. The passengers in the other car are injured and the car is severely damaged. If you hadn't taken out this policy, you would have had to shell out the medical reimbursement and car damage amount from your pocket. However, if you have opted for this smart insurance, your liability will be covered by ALI. Please note that it will not cover the damage to your rental car and will be useful for third party only.
Personal Accident Insurance (PAI)
Personal injury claim form
This is again an optional policy which will protect the renter and the passengers in case of an accident. In most cases, your personal car insurance policy, health insurance, or travel insurance should provide the same coverage. If it doesn't, you can opt for this policy. It gives a one-time payment for injury or death of the renter or other passengers. Remember that this policy does not cover damage to the car or any other property. A primary renter is usually protected from both inside and outside the car; however, passengers may be covered only when they are inside the car. In case of an accident, this policy will provide accidental death benefits and medical expenses for the injured as well.
Personal Effects Coverage (PEC)
Luggage got stolen from car
So, your luggage got stolen from your rental car? As a renter, if you had availed for a personal effects coverage, it would have insured any risk of loss and damage to your personal belongings. At times, it also covers your family members if they are traveling with you in your rented car. This is also an optional insurance policy. In most cases, this will be covered by your personal vehicle insurance policy. However, if it has limitations or does not cover theft or loss of personal goods in a rental car, it is advisable that you avail this insurance.
Here is a small travel tip which can make a huge difference. When traveling to Europe, your car rental company will make you buy ultra expensive excess car rental insurance. Hence, instead of going for the 'excess' CDW or super CDW coverage of £500 - £1,000 which the car rental firm will sell you, buy the insurance independently. This way, you will save a lot of money. The terms of insurance may differ; hence, personally go through the insurance documents provided by the car rental person. It is important that you are aware about these various types of rental car insurance in order to get the coverage that will suit your requirement.