Do you really need car rental insurance?When I first turned 25 and passed the magical barrier that allowed me to rent a car, I routinely dismissed the sales pitches for collision damage waiver (CDW) and other insurance products. This had nothing to do with carefully researched consumer advocacy and everything to do with youthful hubris and ignorance.
That changed one cold midnight at a rental counter, when I was holding my sleeping son and fighting off fatigue. After listening to the pitch for CDW, I considered the precious cargo in my arms and impulsively paid for what turned out to be double coverage. I didn't know at the time that some rental firms intentionally wait until the last minute to hard-sell insurance options — or that some rental agents get incentives to push CDW at the counter.
The fact is, millions of renters don't need to pay for CDW. Many savvy travelers know this, and they pride themselves on automatically rejecting all sales pitches for rental insurance add-ons. However, they also can be so savvy that they leave themselves vulnerable to tremendous losses.
Buying CDW may make sense for you, or it may not. But the time to shop for it is long before you arrive at the counter with a sleeping baby in your arms.
To buy or not to buy
Most drivers are adequately covered for the average rental (assuming it's for pleasure and not business). To assess your own status, here's a rundown of the steps you should take:
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Check your personal auto policy. If you own a car, talk to your insurance agent. The same coverage and deductibles you carry on your car will apply — in most cases — to a vehicle you rent for pleasure. But be careful: If your policy provides skimpy coverage, you may need to compute the value of the loss or damage of a brand-new vehicle and decide if you need to supplement it. For example, many owners of older cars don't always carry comprehensive coverage for accidents, fire and theft.
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Check your coverage by your charge card company. This can be tricky because not only does coverage vary from card to card, but it can vary based on the bank or credit company that issued the card as well. And it's very important that you inquire about exclusions because some exotic or expensive vehicles — such as sports cars, SUVs, motor homes and motorcycles — may not be covered. And vehicles rented outside the U.S. may not be covered, either.
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Check your company's corporate travel policy. If you're on company business, full coverage is probably provided.
There are other factors that may influence you to buy insurance through a car rental company or travel insurance provider. These include driving under unfamiliar circumstances or driving in another country. Or you may want to avoid the hassles of dealing with repair bills and deductibles.
In addition, if you don't own a car or you rent cars very often, you should ask your insurance agent about buying a non-owner liability policy. For a few hundred dollars a year, it can provide ample coverage for multiple rentals and may prove to be a better bargain than CDW.
Options galore
If you've determined that your existing coverage is not fully adequate, you'll be faced with a variety of products to purchase.
Here are the four types of optional insurance offered by most major car rental firms:
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CDW (collision damage waiver) and LDW (loss damage waiver). This relieves you of financial responsibility for a rental vehicle damaged by an accident, vandalism or theft. It usually costs between $9 and $20 per day. Note: Although the sale of CDW was formerly prohibited in New York state, recent legislative changes now allow it.
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SLI (supplemental liability insurance). This provides excess liability coverage up to $1 million. It usually costs between $7 and $9 per day.
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PAI (personal accident insurance). This covers you and all passengers in your vehicle for any medical expenses. It's not necessary for most renters already covered by personal health policies or travel policies. It usually costs between $3 and $5 per day.
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PEC (personal effects coverage). This provides coverage for theft of or damage to personal items inside the rental car. Again, it replicates coverage already provided to many renters through their own insurance policies. It usually costs between $2 and $5 per day.
Rental companies make these options even more confusing by combining two or more into insurance packages. Each product should be evaluated separately. First determine if you have a need for the service, and then verify if you are not already covered. Finally, of course, you have to comparison-shop the costs. Note that in some leisure hot-spots, the cost of taxes, fees, surcharges and optional insurance can easily exceed the daily base rate of the rental itself.
Help on the Web
For further information, check out the car rental company's Web site to examine the insurance options. But be aware that most firms don't post prices on their sites; for that, you'll have to call the toll-free reservations line with the specifics of your rental.
Here are some other sites that could prove useful:
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Risk & Insurance Management, a program sponsored by the University of Utah that includes insurance coverage analysis.
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U.S. Public Interest Research Group is a national advocacy office, with links to individual state PIRGs.
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The Insurance Information Institute, a New York-based organization dedicated to "improving public understanding of insurance."
• Several state governments provide helpful advice via the Internet for consumers buying auto rental insurance. One of the more comprehensive Web sites is maintained by the
New York State Insurance Department.
One last word
Car rental firms use a variety of methods to assess your credit and/or insurance records prior to renting. And some of these methods may affect your credit rating.
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Send Bill your feedback
Bill McGee, a contributing editor to
Consumer Reports and the former editor of
Consumer Reports Travel Letter, is an FAA-licensed aircraft dispatcher who worked in airline operations and management for several years. Tell him what you think of his latest column by sending him an e-mail at USATODAY.com at
travel@usatoday.com. Include your name, hometown and daytime phone number, and he may use your feedback in a future column.
