Understanding Rental Auto Insurance: Inclusive Coverage Explained

When renting a car, you will likely be offered a basic or inclusive insurance package. Basic insurance typically covers third-party liability and fire insurance, while inclusive insurance includes additional protections such as collision and theft protection. Inclusive insurance is particularly useful if you want to avoid assuming total financial responsibility for your rental car and would like to avoid a large hold on your credit card for the duration of your rental. It is important to understand the specific coverage offered by your rental company, as well as any limitations or exclusions that may apply.

Collision damage waiver (CDW)

A CDW covers auto damage during the rental period, and sometimes theft. It typically covers losses from any damage to a rental car while in your possession, including weather-related damage, and damage while the car is parked. It also covers accident-related towing, and the rental agency's administrative fees and lost revenue due to the vehicle being out of rotation (loss of use).

However, CDWs do not cover damage to other cars, bodily injury to other people, injuries to the driver or passengers, or theft or damage to personal items in the vehicle. They also do not cover interior damage to the car, lost or damaged keys, or side mirrors, depending on the rental company and location.

The cost of a CDW is generally about $30 per day, which can increase the weekly rental cost by around $200. It is worth noting that CDWs are often unnecessary if you have personal auto insurance with collision and comprehensive coverage, or a credit card with primary rental car insurance coverage.

Third-party liability insurance

When renting a car, third-party liability insurance will cover any damage you cause to other vehicles or property. This can include repairs or replacement of the affected property. It is important to note that third-party liability insurance does not cover any damage to the rental car itself or any injuries you sustain in the accident. If you are concerned about covering the cost of potential damage to the rental car, you may want to consider purchasing additional insurance, such as a loss-damage waiver (LDW) or collision damage waiver (CDW) offered by the rental company.

In some cases, your personal auto insurance policy may already include third-party liability coverage. It is essential to review your policy or contact your insurance provider to confirm the extent of your coverage before renting a car. This will help you understand if you need to purchase additional insurance from the rental company or a third party.

Additionally, certain credit cards may offer rental car insurance if you use them to pay for the rental. This can be a convenient way to have secondary coverage, but it is important to carefully review the terms and conditions of your credit card benefits.

When deciding on rental car insurance, it is important to consider your existing coverage, the cost of additional insurance, and the potential risks and liabilities associated with renting a car. By understanding your options and choosing the right insurance coverage, you can have peace of mind and protection during your travels.

Theft protection

In some cases, Theft Protection may be included in the rental price, while in other cases, it may be sold as individual insurance at the counter. It is always a good idea to check with the rental company or review your rental agreement to understand what coverage is included and whether Theft Protection is necessary.

Personal accident insurance

When renting a car, you may be offered personal accident insurance, which is an optional add-on. This insurance covers the driver and passengers for any medical expenses, ambulance fees, and death benefits in the event of a collision. It is designed to provide peace of mind and financial protection in the unfortunate event of an accident.

The cost of personal accident insurance can vary, but it generally ranges from $7 to $30 per day, depending on the rental company and the level of coverage chosen. It is important to carefully review the terms and conditions of the policy to understand the specific benefits and exclusions.

When deciding whether to purchase personal accident insurance for a rental car, it is essential to consider your existing coverage and the likelihood of needing additional protection. While it may provide peace of mind, it is not always necessary, and you may already have adequate coverage through other means.

Personal effects coverage

PEC is intended to fill the gap left by other insurance policies, such as collision insurance or liability insurance, which do not cover the theft or damage of personal belongings. For example, if your laptop is stolen from the rental car, PEC will provide coverage, whereas other insurance policies would not.

However, it is important to note that PEC may duplicate coverage provided by your homeowner's or renter's insurance policy. Therefore, it is recommended to review your existing insurance policies before purchasing PEC to avoid paying for overlapping coverage.

Additionally, PEC policies typically have exclusions and limitations. For example, they may not cover loss by "mysterious disappearance," meaning items stolen from a locked car without signs of forced entry may not be covered. Other common exclusions include currency, jewellery, and electronics.

Overall, while PEC is not a mandatory coverage, it can provide valuable protection for your personal belongings in the event of theft or damage during your rental period.

Frequently asked questions