In a previous article, I went over the Collision/Loss Damage Waiver (CDW/LDW) rental car companies offer, ways you might already be covered, and other ways to purchase coverage. There are three additional types of coverage that car rental companies offer. These policies cover your exposure to personal liability or medical expenses resulting from an accident with the rental car, and give you protection if your property is stolen from the vehicle. You may or may not need these types of coverage so it’s important to know what they are and how you may already be covered.
Please note that this information is for a car rented in the United States. If you are a U.S. resident and are renting outside the U.S., your auto, homeowners or medical insurance may not cover you, and purchasing these forms of coverage may make sense (or even be mandatory). The same goes for international travelers renting a car in the U.S. Please note that I’m not an insurance agent nor an expert, so I suggest reading the policies including, but not limited to the parts regarding policy limits, deductibles and exclusions before making any decisions.
Supplemental Liability Insurance (SLI) or Liability Insurance Supplement (LIS)
While the CDW protects you from damage to the rental car, this coverage gives protection for damages caused by you while DRIVING the car. This includes property damage (to someone else’s car, house, store or any other physical damage) as well as damages for injuries caused by your negligence. These claims can be quite costly so it pays to be covered and, although some credit cards will pay for CDW, none will provide coverage for SLI/LIS.
LIS/SLI coverage sold by car rental companies typically provides up to $1,000,000 worth of coverage. Instead of purchasing this coverage, you may already have other types of insurance that will cover these expenses.
Almost all states require vehicle owners, in this case, car rental companies, to carry a minimum amount of liability coverage to register the car. However, the companies will usually only have coverage for the bare minimum legally required and that’s not going to cover you if you total someone else’s $40,000 car. If you have your own auto insurance, that will usually cover you up to your policy limits. This is the same as how your own insurance will cover you for damages to a rental car, making the need to buy the CDW unnecessary. If you’re comfortable with the coverage on your own car (and if you’re not, look into that), you shouldn’t need the liability coverage.
One option for people who do not own a car but rent cars often is a non-owner car insurance policy. These policies provide liability protection when driving a rental car or if you’re driving a car that you are borrowing from a friend or family member. If you have a homeowner’s policy, calling your insurance company is the best place to start. Otherwise, you’ll have to shop around and call for quotes as most companies do not supply online quotes for these policies.
If you have a lot of assets (money and stuff) you might look into getting an umbrella liability policy with your homeowners or renters insurance company. Just like the name implies, this policy will cover you for any liability claims, including ones that happen while driving a rental car.
However, if you don’t have any other type of insurance, paying the car rental company $10 a day or so for this coverage isn’t such a bad deal.
Personal Accident Insurance – (PAI)
This coverage, which usually runs a few dollars a day, covers you for things like medical expenses and ambulance costs and also provides an accidental death benefit. If you have your own medical insurance or Personal Injury Protection (PIP) on your auto insurance, you are already covered for these expenses, so coverage is unnecessary.
If you need life insurance, you, hopefully, already have it so paying for accidental death insurance is not needed.
Personal Effects Coverage (PEC)
Having something stolen from your rental car is never fun but it does happen more often than you would like to think (especially when people leave personal possessions visible in the car). The usual personal effects coverage offered by the rental car companies will cover you for up to $500 per person and $1,500 per instance.
If you have homeowners or renters insurance, you already have coverage for your personal property, even when you’re traveling. If something gets stolen from your rental car, you can put in a claim but you’ll need to meet the deductible on the policy. So if the only thing stolen from the car is an inexpensive digital camera, it won’t be worth making a claim. Beware that there is often a maximum amount per item so if you’re traveling with, or own, anything really expensive (like jewelry) you may need to tell your insurance company and pay a little extra just to cover that item.
PEC coverage from the car rental company runs only a few dollars a day but the coverage is minimal. Five hundred dollars of coverage seems like a lot but if your $1500 camera is stolen from your car, you’re still going to have to pay a bunch of cash out of pocket to replace it. This coverage is also secondary so if you want to use it, you’ll still need to make a claim on your own insurance first, if you have any, and then the PEC coverage will pay for whatever amount that isn’t covered.
If someone steals an item you just purchased, you may be covered by your credit card’s purchase protection. This will cover items that were purchased within the last 60-120 days (depending on the card). That means you’re also covered for items bought just before your trip, like new noise-canceling headphones or a new phone. Just make sure you use a card that has this type of coverage.
Final Thoughts
Between this and my previous article, you now have a rundown of the four types of coverage rental car companies offer. I suggest you check if you already have insurance that will pay for these expenses. You can then set your preferences as needed with the rental car companies and skip the rental line entirely. After all, avoiding the sales pitch was the goal of this process all along.
You now have the information on how to get a cheap rental car and how to skip the big three add-on prices for rental cars:
- Prepaid Gas
- Toll Charges
- And now, Insurance Coverage.
With this information, you’ll be able to get out of the airport as quickly as possible and get to enjoy your vacation (or get to your hotel to prepare for your work meetings).
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4 comments
I don’t remember which rental company it was, but I have seen flat tire insurance. They said otherwise the tire would have to be replaced with a new tire, and that repairs were not acceptable.
If you get a flat and have it fixed, how would they ever know?
It would take a lot of inspection. In reality it was just another scare tactic.
Please please expand this to renting outside the US as well
As you mentioned the credit card companies only provide comprehensive insurance not liability or medical. Please add if there are specific policies we can buy stateside before renting a car internationally. We don’t know what kind of policies are sold by rental car companies internationally. Some of these rentals are mom and pop rentals. They may take the premium and provide no protection.
This will make your article comprehensive. In fact combine the two articles and make it into a wik that you update regularly.