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Rental Car Insurance & Collision Damage Waiver (CDW)
Article 4 of 4 in Car Insurance for Loaned, Borrowed, and Rented Cars
There are two primary questions to address when discussing how your auto insurance policy intersects with renting a car:
- Does my car insurance pay for my rental car?
- How do I make sure I am insured when I'm driving a rental car?
When purchasing a car insurance policy, or renting a car, you will want to make sure you get these questions answered. You will typically have the option to increase your rental car insurance should the policy not meet your needs.
Rental Reimbursement Insurance
Rental reimbursement insurance pays a small amount (typically $10 to $15 per day) toward renting a car while your car is being repaired as a result of an accident or other insured damages (storm damage, vandalism, etc.). Reimbursement is usually up to a limit (generally between $700-$900 per accident, giving you about 60-90 days of use of the rental vehicle). This type of car rental insurance is not in every policy, so be sure to ask your insurance company if your policy includes a rental car reimbursement provision.
Rental Car Insurance and Collision Damage Waivers
Any time you rent a car, you will be given the option of purchasing an insurance policy from the rental car company, or signing a Collision Damage Waiver (CDW).
- A CDW is not a type of insurance. It is a waiver of the rental agency's insurance for those who have other collision coverage of their own in place. The rental company charges a small fee for CDW in order not to charge you a high deductible amount should the rental car be wrecked or damaged. The insurance carrier on your personal vehicle then becomes the primary collision insurance provider for you while driving the rental car. Before renting a car, it is a good idea to read your coverage in your own auto insurance policy.
Typically, a rental car insurance policy will protect you from potentially costly accidents you get into while renting the car, but they may not be necessary depending on the insurance you already have.
TIP: If you are renting a car on vacation, your personal car insurance policy will usually cover you. If you are traveling on business, you need to check with your employer and your insurance agent. When issuing personal policies, many companies have restrictions on business-related rental coverage.
Rental Car Insurance on your Credit Card
You should note that your credit cards may provide you with additional auto insurance if you use the card to pay for the car rental. This is especially true for the Collision Damage Waiver (CDW). Many credit cards provide this same protection when you use them to charge the rental car. Check the terms of your credit card agreement to see if additional coverage is provided. This is also true if you do not own a car or do not have any rental car insurance. But before buying rental car insurance, check your credit card agreement or call the company before driving. It could provide the coverage you need.
Rental Car Insurance: Where are you covered?
Before renting a car anywhere, check your policy language to make sure you are covered. Many countries do not recognize the same insurance regulations within the U.S. If you intend to drive in another country, make sure you check with your rental car insurance coverage first. The rental car provision in your insurance policy generally covers you when renting a car in the U.S. and Canada. In fact, both countries usually recognize the same liability, comprehensive and collision coverage limits on your policy. Unfortunately, it's not the same everywhere. Driving in places like Europe or outside of the borders of Mexico is usually NOT covered.This would mean you would specifically have to purchase insurance for those countries. Do not consider this an unnecessary expense and go without!
Renting a van or pickup for business or for a family trip can be tricky.
Some car rental insurance defines coverage vehicles by the number of axles or passenger seating. For example, a mini van seating 9 could be covered but a side entry passenger van with four row seating, carrying up to 15 passengers, would not due to the exposure of possible bodily injury in the event of a bad accident. Therefore, check with your carrier. Fully explain the vehicle you intend on renting. The purchase of an additional policy may be necessary.
Overall, rental car insurance can be very convenient especially when you experience the sudden loss of use to your own vehicle. Make sure that before you drive the proper coverage transfers to the rental vehicles, it could make all the difference in the event of a sudden accident of damage of your rental car. If you need to find an auto insurance policy that covers you when you rent a car, visit the Free Advice quote center to get started with your shopping!
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