Rental Car Insurance: Types, Coverage, and Recommendations
When looking at the different options for car rental insurance in the United
States, you will generally run into five options. These are Loss Damage
Waivers (LDW) which are also commonly referred to as Collision Damage
Waivers (CDW). There is also Liability Insurance Supplement (LIS), Personal
Accident Insurance (PAI), and UMP, which is Un- and Underinsured Motorist
Protection. The fifth option is to not take any rental insurance at all, but we’ll
get back to that one later.
LDW/CDW takes care of pretty much everything. It takes care of your own
risks, plus if the car is stolen or damaged, then Loss Damage Waivers will
cover the entire cost. This is by far and away the best insurance for car
rentals as far as coverage goes—but the price reflects it. Many places charge
$20-30 per day for this type of insurance, which means even a single week
can cost you an additional $210. This insurance can be, and often is, even
higher if you rent a full-sized or luxury vehicle.
Liability Insurance Supplement is often in addition to whatever other
insurance you purchase. LIS covers you for the costs of any damage or
injuries that are a direct result of an accident you are involved in. LIS is
usually much cheaper than LDW/CDW, but this may still cost you $8 a day
and it adds up, though there is a definite degree of reassurance from
knowing you are covered.
The two other insurances that are generally offered are Personal Accident
Insurance and Uninsured Motorist Protection. While both of these may seem
appealing at first glance because of cheaper prices, don’t be fooled. There is
almost never a situation where you actually need one of these. If you’re
going to buy insurance for a rental car, then buy the larger policies that are
more inclusive. Saving $5 a day won’t help if you get into an uncovered
Then there was the fifth option: not buying any. Insurance is expensive, so it
is important to see if this actually is an option for you. Some car insurance
policies automatically cover rental cars, which makes any rental insurance
both superfluous and fiscally unsound. Also see your credit card company’s
policies. Some of the more respectable credit cards have a policy to
automatically cover you as long as you put the rental on that card. If either
of this cover you, that is a much better route to go than rental insurance
from the agency itself.
All of that being said, make sure that you are not under insured. Otherwise if
you are involved in an accident you might end up paying for any damages you
shouldn’t have to pay for. Always check each insurance policy for coverage
and cost, and make sure the first makes it worth the latter.