Credit Cards
There are more credit cards that offer COLLISION DAMAGE WAIVER or CDW on rented vehicles. If you are lucky enough to have this on your credit card, while it’s good to know it’s in your back pocket, you cannot rely only on CDW insurance when you rent a car.
First, know the limit of this coverage versus the value of the car you are renting. But most important, CDW is not LIABILITY coverage, and this is the big monster that you need to have. The car you damage is one thing, the person or property you injure, especially in the United States, could wipe you out financially between payouts and legal fees.
Your Own Policy
It is important that you contact your own car insurance broker and find out if you have an inclusion or rider on your own policy that covers both the liability and collision damage of rented vehicles. Find out if there are any destinations that are not covered. You should know this before you rent a car.
Driving in a strange city, different rules of the road and driving culture can really increase the chance of driver error and distraction. You can purchase EXTENDED LIABILITY COVERAGE from the rental car company, and of all the insurance they offer you, this one is the most important to purchase if you do not have it on your own car insurance policy. You should ask the car rental company what amount of liability insurance is included in the rental because some only insure to the jurisdiction minimum requirement.
Last, there is something called PAI or PERSONAL ACCIDENT INJURY insurance which car rental companies offer. In Ontario, the minimum required liability insurance is $200,000 but most insurers routinely offer $1M. In Florida this number is only $20,000! Meaning, a poorly insured driver, or an uninsured driver who injures you may only have $20K in coverage and no other assets. This would leave you with nothing. Ask your insurance broker about this coverage as well as a rider to your policy, or purchase the PAI in foreign jurisdictions where you will be renting a car to protect you against uninsured or poorly insured drivers.
All-Inclusive Plans
Car Rental companies offer “All Inclusive” rentals, where you have increased liability, CDW, theft, and PAI and the rental in one price often inclusive of tax. These rates are typically a big discount off of paying the basic rental and buying each insurance plan a la carte. The all-inclusive rental offers “peace of mind” that you can walk away from an accident without having to get your own insurance company involved and communicating back and forth for months after.
We do offer physical car rental damage insurance (something like the CDW) that we can sell you for less money than you will pay directly to the car rental company. However, this leaves you with two very large gaps in coverage that we do not sell, and we strongly recommend that you contact your own car insurance broker. What we sell (and what is offered on your credit card) is not adequate.
Once you speak with your own broker and understand what they can offer you and how you would claim, you may still want to consider the worry-free option of purchasing an all-inclusive rental through us in advance. We recommend this when renting outside of North America where car theft and very different laws can be a real hassle even if you are technically covered on your own policy.
Things to ask your Car Insurance Broker before you rent a car:
- Does my policy cover me for third party liability coverage in __________(destination) on a RENTED car, and what is my coverage limit? (this should be at least $1M and higher for the US, especially if you have assets in excess of that amount)
- Does my policy cover me for Collision Damage and Theft of the RENTED car?
- Does my policy cover me against the risks of UNINSURED DRIVERS or poorly insured drivers if someone injures me in the rented car?
- Can I purchase a rider for my policy to cover these risks? How much? How many rentals does it cover in a year? Does it automatically renew every year with my insurance?
- If I did get into an accident with a rented car, who do I call and when? Will I have to pay money out first and claim later?
- Will the rider or coverage include legal representation in ___________ (destination) and costs?
If you don’t like the answers to any of these questions, then you should consider a prepaid all inclusive rental booked in advance, or know which coverage you will rely on your credit card, and which you should pay locally when you rent the car.