You're at an increased risk of an accident when driving a rental car due to a number of factors, such as not being familiar with the vehicle or the local roads. It's therefore important to make sure you have insurance coverage that's appropriate for travel.
The fallback option is the insurance sold by the rental car company. If you're a government employee, or an active duty or retired member of the military, you might get this thrown in for free at a few of the major rental agencies. For the most part, however, insurance coverage represents a substantial added cost even if you're in the highest tiers of that rental company's rewards program. Full coverage can cost as much as $40 per day, which is often as much or more than the cost of renting the vehicle!
Fortunately, there are better options that doubling the per-day price of your rental. It helps to understand the separate types of insurance offered by the car rental agency first, however, so you know whether these alternative forms of insurance provide equivalent coverage.
Types Of Rental Car Insurance
Collision And Loss Damage Waivers (CDW and LDW)
This is the most basic form of rental car insurance. It covers damage to the vehicle due to collisions, theft, vandalism and other forms of environmental or accidental damage. Damage is generally covered regardless of fault.
Personal Accident Insurance (PAIC)
This coverage is for medical expenses for you and your passengers.
Personal Effects Coverage (PEC)
This coverage is for damage to any items you have in the car, like luggage or electronic devices. It generally covers theft of these items in addition to damage caused by an accident.
Supplemental Liability Insurance (SLI)
This is an excess liability policy, which means it can be shifted to any other area of coverage as needed if that area doesn't cover the full amount of damage done on its own.
Do You Already Have Insurance?
You may already be carrying rental car insurance and not realize it. Check these sources for possible coverage before you head out on a trip and get pressured into a purchase at the rental desk.
Built-In Credit Card Insurance
Many of the major credit cards (Visa, Mastercard, Discover, American Express) provide at least collision and loss damage coverage, if not even more extensive protection. Naturally, you have to pay for the rental car with the card for this coverage to activate. Details about the coverage amounts and limits should have been mailed to you as a paper or brochure when you first received the card.
Coverage Through Your Existing Car Insurance
Some car insurance policies do extend your comprehensive and liability coverage to rental cars. Some policies even include rental reimbursement for periods in which your main vehicle is in the shop.
Inclusion In Travel Insurance
A travel insurance package will often include rental car coverage. This is usually the simplest option when renting a car overseas if you do not get comprehensive coverage through your credit card.
What About International Insurance?
Rental car insurance while traveling internationally is a whole new can of worms, even if you already have existing coverage.
The ideal situation is that your credit card or auto insurance policy will cover you regardless of location or vehicle type, even if you are overseas. As mentioned previously, if this is not the case, a good travel insurance package is likely the best option. Purchasing insurance at the rental counter in another country is dicey due to their unique rules and terminology, plus you'll have to engage in any legal challenges from across national borders if a dispute crops up later.
If you do have to purchase insurance locally while in another country due to a lack of other options, it's important to get the smallest possible deductible -- preferably zero. Other unfamiliar terms such as "excess" may be used for this deductible, so be sure to ask about anything you don't recognize or understand.
A membership with AAA has a wide range of benefits both in everyday life and when you are traveling, including hotel and rental car discounts. Contact us to learn more!