You are at the rental car counter, and the pressure is on.
You’ve just landed at your destination. You’re in a hurry to get to where you need to be. The rental car agent is pushing the extra insurance coverage. It’s often known as Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW).
It’s expensive. They want you to buy it, and four people are lined up behind you, impatient that you can’t make up your mind. Your palms begin to sweat.
You may already have coverage for a rental car.
Your personal car insurance may cover you. Most personal auto insurance policies extend their coverage to your rental car. But there are often exclusions and limitations (such as you must have Collision Coverage on your personal vehicle).
Your credit card may cover you. Many major credit card companies provide rental car insurance automatically when you pay using their card. But there are exceptions and limitations, and not every card offers this kind of coverage.
You could buy the additional coverage offered by the rental car company. If you want “simple,” this may be the way to go. Worrying about exceptions and exclusions isn’t fun. Sometimes it’s worth paying extra to have “peace of mind.”
You could also explore your coverage options, and see if you can be covered adequately without paying extra for the rental car insurance.
If you want to explore your options, do these three things:
1. Read the rental car company agreement and insurance policy.
Sometimes these agreements and policies are online; often they are not. You may have to call the company to get a copy in advance.
Look for the “gotchas” in the agreement such as Loss of Use fees, Administrative & Towing, Diminution of Value, and more. Read the agreements carefully.
2. Check out your credit card benefits.
Many major credit cards offer extended rental car coverage if you use their card to pay for the rental. Call customer service to see what your coverage might be. Coverage varies dramatically. Also remember that in most cases, the credit card company policy would pay after your auto insurance settled the claim.
3. Talk to your local insurance agent.
No one knows the coverage on your current auto insurance better than your agent. They can ask the right questions (such as, “is this a business trip?” and “what kind of vehicle will you be renting?”) to help you decide if you need the additional coverage offered by the rental car company. Get the advice you need.
Every situation is different.
Know the risks. (Evaluate the rental car agreement.)
Find out what credit card benefits you may have. (Call your card company.)
Become familiar with your personal auto policy. (Talk to your agent.)
Don’t pay for extra coverage if you don’t need to. Ask your agent for help.
Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates helping clients with insurance needs for personal, commercial and business insurance. Bruce can be reached at 707-931-0186, firstname.lastname@example.org