Whether you’re hitting the road for a weekend getaway or renting a car from an airport, knowing all your insurance options before you get to the car rental counter is wise. Here are the basics.

Understand what your car rental company offers

Should you take the insurance the car rental company offers at the checkout counter? It depends on your current personal insurance situation. If you have auto insurance already, you might have some added options beyond the rental company’s coverage. Either way, here’s what most rental companies will offer.

Loss or collision damage waiver

A loss damage waiver (LDW), also known as a collision damage waiver (CDW), isn’t technically insurance coverage. An LDW or CDW removes your financial responsibility if your rental car is damaged or stolen. Claims remain separate from your personal auto policy and don’t appear on your auto claims history. This waiver usually covers the rental agency’s “loss of use” charges if the rental is being fixed or towed. Losses related to off-road driving, speeding or other hazardous driving might not be covered, so make sure you understand the exclusions. 

Liability insurance

By law, car rental companies must provide state-required minimum liability insurance coverage. However, the Insurance Information Institute (III) says this plan often doesn’t offer enough protection. Liability coverage won’t protect you if the rented vehicle is lost, stolen or damaged. It will only protect you in the event of an accident. 

Personal accident insurance

Personal accident insurance will cover injuries to you and your passengers in an accident. 

Personal effects coverage

Personal effects coverage protects any items stolen from a rental car. If you don’t have homeowners or renters insurance, this is something you should consider. 

How your credit card may help

If you’re relying on the protections that your credit card company may offer, understand that deductibles and restrictions are probably in place. Every credit card company has different coverage options, such as:

  • Primary coverage or first to respond — Some credit card companies offer primary coverage, which means they respond to the claim first. Some coverage excludes certain vehicles (trucks, luxury cars, moving vans) or vehicle price valuations (nothing over $50,000). Even with primary coverage options, you might not have adequate liability or medical insurance to protect you in an accident.
  • Secondary coverage or second to respond — Most credit card companies offer secondary coverage, which means you have to have a primary auto insurance policy. If you don’t already have personal auto insurance, then you’ll be without coverage. Secondary coverage is like an excess policy and may help with out-of-pocket expenses.

Contact your credit card company to clarify the fine print before declining other insurance options.

Consider coverage you may already have

If you own a car and have full coverage, your protection will typically carry over to rental cars. But this also means claims resulting from a car rental will go on your personal auto claims history.

Personal auto coverage may pay for the rental damage, but the claim goes on your policy

If you have a claim involving your rental car, your auto insurance should cover the rental car (with the same exclusions and limits). The claim will appear on your personal auto insurance history, though, which could affect your rates for the long term.

Out of pocket at the counter

Even if you have comprehensive and collision auto insurance, you’ll likely have to pay car rental damages upfront and recoup those costs by filing a claim with your insurance company. In this case, you may be signing a credit card bill for hundreds or even thousands of dollars when you return the damaged car, not knowing if you’ll get that money back. For this reason, most car rental companies won’t accept debit cards or credit cards with small limits.

Contact your agent before you rent a vehicle

Always do your research before signing on the dotted line for a rental car. And remember, every state and country has legal minimums, such as underinsured/uninsured motorists or medical payments insurance. If you opt to use your personal insurance and you have a claim, it could affect your premiums. Call your insurance agent for advice and to confirm the details of your insurance coverage.

Blue Ridge Risk Partners is a top 75 independent insurance agency in the United States. With 22 offices and counting throughout Maryland, Pennsylvania, and West Virginia and access to hundreds of carriers, we are able to meet your unique insurance needs.