Understanding Rental Car Insurance Coverage
When renting a car, you will almost certainly be offered some form of insurance on the rental car. At first glance this coverage may seem absolutely necessary, or absolutely unnecessary depending upon the assumptions you make about car insurance and rental car companies. Fortunately, it is easy to unravel the complex nature of car rental insurance offers to find the best rates and advice about insurance coverage for rental cars.
The two most common names of rental car insurance are Collision Damage Waiver, or CDW coverage, and Loss Damage Waiver, or LDW coverage. In most cases, there is really no difference between the two types of coverage. Generally, it is just a matter of what terminology the rental car company chooses to use. For example, both Avis and Hertz offer Loss Damage Waiver (LDW) coverage on their reservation websites.
If the rental car is damaged in an accident or other manner while you are renting it, you are liable for the cost of those damages. By purchasing the rental company's insurance protection, you avoid this potential liability. However, the rates charged for this coverage can be very high, so it is very smart to investigate other rental car insurance coverage options to get the best rates.
The best advice about insurance coverage for rental cars is to see if you are already covered for damage or loss of the automobile by other means. Most auto insurance policies cover the driver for damages to any car, regardless of who owns the automobile. This also includes rental cars. The best advice for deciding whether or not to get the rental car insurance from the rental company is to call your insurance company first. Call before you leave on your trip so you have plenty of time to get all of your questions answered. In most cases, your personal auto insurance policy will provide coverage for rental cars.
If you are traveling for business, check with your company to see what their policy is on rental car insurance. In some cases, your company will require you to purchase the rental insurance, but will reimburse you for the charge. In other cases, the company will specifically ask you to decline the CDW coverage, and may even refuse to reimburse you for it. Most larger companies have some general liability insurance in place that covers issues arising from conducting the day-to-day operations of business, including coverage for employee who rent cars while on business trips.
Think about it for a minute. You own a car. You have a driver's license and car insurance. Your friend allows you to borrow their car. Are you covered by your auto insurance? Of course, you are. Your car insurance covers you as well as the car you are driving, just like your home owners insurance provides liability coverage even for situations that don't necessarily occur at your house.
Image Credit: Hertz Chile / Wikimedia Commons