Should you purchase car rental insurance at the counter, or does your personal auto insurance cover you?

If you’re planning to rent a vehicle, here are a few tips on what your policy covers and doesn’t cover to help you in deciding how much coverage to buy from the rental company.

First, if you’re renting a truck larger than a pickup, your policy typically doesn’t pay for any damage to the truck.  Your credit card likely won’t help either.  We recommend buying the extra coverage they offer, especially the part that covers damage to the truck.  You may also want to buy their “Cargo” coverage to protect you against damage to the things you’re hauling.  Most truck rental companies provide you with liability coverage that pays for damage and injury you might do to other people, but it doesn’t hurt to ask.

If you’re renting a vehicle outside the U.S. and Canada, your policy usually won’t cover you without some additional endorsements.  You need to buy the optional coverage for damage to the rental car, generally called “Collision Damage Waiver” (CDW) or Loss Damage Waiver (LDW).  Some foreign countries provide liability coverage automatically, but if it is optional, or if the amount provided is minimal, be sure you take it too.

When renting a car, pickup or van in the U.S. or Canada, your policy will likely pay for damage to a rental car if you carry Collision your personal vehicles.  You would still have to pay your deductible.  Your credit card may also cover damage to the rental car.  But, we still recommend you purchase the optional Collision or Loss Damage Waiver.  Though your policy or your credit card may pay to repair the damage, rental companies are always coming up with some new thing to soak you for that isn’t covered by your insurance.  For example, after one person’s auto policy paid $6,000 to repair a damaged rental car, the rental companies sued them for an additional $9,000 to cover the reduction in the car’s value.  Rental companies also charge you for loss of rental income while the car is being repaired.  Your policy might not cover this, though your credit card might.  Lastly, the rental company has your credit card and can immediately lock up charges against pre-authorizations.  It can take time for your carrier to come in and make payments, and until then, your credit card is holding the balance. Again, if you don’t carry Collision coverage, you won’t have any coverage for damaging a rented vehicle.

Your liability coverage (in case you injure someone or damage someone else’s property) will follow you in the U.S. and Canada.  However, you may also want to purchase the optional Liability protection, especially if you don’t want to turn in a claim on your policy.  Remember you will be driving a “new to you” car in a “new to you” city and the opportunity for accidents go up.

Rental car companies also sell “Personal Accident” coverage for medical expenses and death caused by a car accident.  If you have adequate life and medical coverage, we don’t recommend this.  Another option is “Personal Effects” coverage that pays for loss to your luggage and personal property in a car accident.  It’s very limited and often duplicates coverage provided by your Homeowners policy, so don’t buy it.

Regarding coverage that some credit cards offer, you will need to check with your credit card company. The type and limits of coverage vary widely and can’t be guaranteed to respond unless you check with them and are absolutely clear about the coverage.

Finally, if you’ll be renting a vehicle for business reasons, check with your employer to see if they will protect you.  If not, we’ll need to know specifically what you’ll be renting since some vehicles, especially pickups and vans, aren’t always covered when rented for business use.