Rental Car Insurance
Rental car insurance protects you if you rent a car and are later liable for hitting another vehicle. It would also cover damage or theft involving the rental car itself.
What is rental car insurance?
If you’ve ever been at a Hertz rental counter filling out all the paperwork, you’ve likely been offered rental car insurance just in case you get into an accident or the car is stolen. And, if you’re like a lot of people, you probably wondered, “Do I need rental car insurance?” Maybe you went ahead and signed on the dotted line anyway, just to be extra cautious.
Rental car insurance is actually not a car insurance policy at all. Car rental companies offer a collision damage waiver (CDW), sometimes known as a “loss damage waiver” (LDW), which gets you off the hook if anything happens to the rental, usually without a deductible. Rental car companies also offer a liability insurance policy, in addition to the collision damage waiver.
Your personal car insurance likely already includes rental car insurance, although it is probably limited to the United States and Canada. Check with your insurer or read over your insurance plan to see if yours does.
What about in the case of Lemonade Car? If you have a full coverage insurance policy with us, including liability insurance, collision coverage, and comprehensive, then Lemonade’s policy covers you while you are renting a car in the United States and Canada. But you wouldn’t be covered when renting a vehicle like a UHaul truck.
Should I buy a a collision damage waiver or liability coverage for my rental?
It depends on the coverage your current car insurance policy offers you, and how much car insurance you have overall.
If you are thinking of purchasing a collision damage waiver or a loss damage waiver, you need to consider what personal insurance you already have.
If you only have liability insurance, then a CDW may definitely be prudent. Without it, you’d be responsible for any damage you cause to another vehicle. If you have collision and comprehensive coverage on your own auto insurance policy, then it’s possible that you’re simply duplicating your coverage for no good reason.
However, it’s important to consider something known as “loss of use.” This is a clause in many rental agency contracts that charge a daily fee for the company’s “loss of use” (that figure will vary depending on what state you’re in, the type of rental dar it was, and other factors). Essentially, since rental agencies make money by renting out the vehicles, if one is involved in an accident and has to be repaired, it impacts their ability to rent it out for business. That loss of use fee helps compensate the agency for the time the car isn’t available for rental.
The collision damage waiver would waive that fee, but your personal car insurance doesn’t typically reimburse for it. Read the rental agreement carefully to make an educated decision. Some people get the CDW for extra peace of mind.
What about the stuff inside my rental car?
Another policy available at the rental car counter is personal effects coverage. If your rental car is stolen, and you’ve left anything inside, this policy covers those belongings. However, if you have homeowners or renters insurance with Lemonade or another carrier, your personal items are likely already covered. (You may have a deductible that will be required to be paid prior to payout.)
Let’s talk injuries…
If you or your passengers get hurt in an accident, one of the coverages offered at the counter is personal accident insurance. This is designed to cover your medical bills. However, you are likely already covered by your medical payments coverage or personal injury protection as a part of your personal car insurance, or if you have medical insurance.
What if I’m renting a car in Croatia?
If you are renting a car outside of the United States and Canada, you likely will want to purchase a collision damage waiver, as most insurance companies won’t cover your rental car in the event of an accident or theft. However, check out your travel insurance plan if you have one, since it may offer or include coverage.
But what about my credit card, I’ve heard that can help when I rent a car?
Some credit card companies offer rental car insurance as a perk. This is designed as secondary coverage for your rental vehicle. Your personal car insurance coverage would be the primary, and the credit card issuer would provide reimbursement for deductibles and exclusions. Be sure you inquire with your credit card company about what their rental car coverage includes before deciding whether you want to purchase additional coverage.