In a previous article, I went over the Collision/Loss Damage Waiver (CDW/LDW) that rental car companies offer, ways you might already be covered and other available ways to purchase coverage. There are three other types of coverage that car rental companies will offer you. These policies cover your exposure to personal liability or medical expenses resulting from an accident with the rental car, and protection if your property is stolen from the vehicle. You may or may not need these types of coverage so it’s important to know what they are and how you may already be covered.
Please note that this information is for car rented in the United States. If you are a U.S. resident and are renting outside the U.S., your auto, homeowners or medical insurance may not cover you and purchasing these forms of coverage may make sense (or even be mandatory). The same goes for international travelers renting a car in the U.S. Please note that I’m not an insurance agent nor an expert, so I suggest reading the policies including, but not limited to the parts about policy limits, deductibles and exclusions before making any decisions.
Supplemental Liability Insurance (SLI) or Liability Insurance Supplement (LIS)
While the CDW protects you from damage to the rental car, this coverage protects you from damages caused by you while DRIVING the car. This includes property damage (to someone else’s car, house, store or any other physical damage) as well as damages for injuries caused by your negligence. These claims can be quite costly so it pays to be covered and, although some credit cards will pay for CDW, none will provide coverage for SLI/LIS.
LIS/SLI coverage sold by car rental companies typically provide up to $1,000,000 worth of coverage. Instead of purchasing this coverage, there are several other types of insurance you may already have that will cover these expenses.
Almost all states require vehicle owners, in this case the car rental companies, to carry a minimum amount of liability coverage in order to register the car. However the companies will usually only have coverage for the bare minimum legally required and that’s not going to cover you if you total someone else’s $40,000 car. If you have your own auto insurance, that will usually cover you up to your policy limits. This is the same as the way your own insurance will cover you for damages to a rental car, making the need to buy the CDW unnecessary. If you’re comfortable with the coverage on your own car (and if you’re not, look into that), you shouldn’t need the liability coverage.
One option for people who do not own a car but rent cars often is a non-owner car insurance policy. These policies provide liability protection when driving a rental car or if you’re driving a car that you are borrowing from a friend or family member. If you have a homeowners policy, calling your current insurance company is the best place to start. Otherwise you’ll have to shop around and call for quotes as most companies do not supply online quotes for these policies.
If have a lot of assets (money and stuff) you might look into getting a umbrella liability policy with your homeowners or renters insurance company. Just like the name implies, this policy will cover you for any liability claims, including ones that happen while driving a rental car.
However if you don’t have any other type of insurance, paying the car rental company $10 a day or so for this coverage isn’t such a bad deal.
Personal Accident Insurance – (PAI)
This coverage, which usually runs a few dollars a day, covers you for things like medical expenses, ambulance costs and provides an accidental death benefit. If you have your own medical insurance or if you have Personal Injury Protection (PIP) on your auto insurance, you are already covered for these expenses, so coverage is unnecessary.
If you need life insurance, hopefully you also already have it, so paying for the accidental death insurance is also not needed.
Personal Effects Coverage (PEC)
Having something stolen from your rental car is never fun but it does happen, and more often than you would like to think. The usual personal effects coverage offered from the rental car companies will cover you for up to $500 per person and $1,500 per instance.
If you have homeowners or renters insurance, you already have coverage for your personal property, even when you’re traveling. If something gets stolen from your rental car, you’ll still need to meet the deductible on the policy. So if the only thing stolen is a inexpensive digital camera it usually won’t be worth even making a claim. Beware that there is often a maximum amount per item so if you’re traveling with, or own, anything really expensive (like jewelery) you may need to tell your insurance company and pay a little extra just to insure that item.
PEC coverage from the car rental company runs only a few dollars a day but the coverage is very limited. Five hundred dollars of coverage seems like a lot but if your $1500 camera is stolen from your car, you’re still going to have to pay a bunch of cash out of pocket to replace it. This coverage is also secondary so if you want to use it, you’ll still need to make a claim on your own insurance first, if you have any, and then the PEC coverage will pay for whatever amount that isn’t covered.
If someone steals an item that you just purchased, you may be covered by your credit card’s purchase protection. This will cover items that were purchased within the last 60-120 days (depending on the card). That means you’re also covered for items bought just before your trip, like new noise cancelling headphones or a new phone. Just make sure you use a card that has this type of coverage.
Between this and my previous article, you now have a rundown of the four types of coverage you’ll be offered by rental car companies. I suggest you go now to check if you already have insurance that will pay for these type of expenses. You can then set your preferences as needed with the rental car companies and skip the rental line entirely. After all, avoiding the sales pitch altogether was the goal of this process all along, right?
You now have the information on how to get a cheap rental car and how to skip the big three add-on prices for rental cars:
With this information, you’ll be able to get out of the airport as quickly as possible and get to enjoying your vacation (or get to your hotel to prepare for your work meetings).
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