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Renting a car can be a daunting task, especially when you throw buying the right insurance for your needs into the mix. In some cases, you may want to purchase rental car insurance while in other cases you’ll already be covered by your credit card or some other form of personal insurance.
Find out more about when you might want to purchase a rental car policy and when it makes sense to fall back on other alternatives.
Rental car insurance is an added layer of insurance that you can purchase to cover yourself and others against bodily harm or vehicle damage due to a collision. It can also help to protect your rental vehicle or personal belongings in the event that they are stolen or damaged.
Depending on what type of car rental insurance you have or decide to purchase, you’ll be covered for different situations. The purpose of getting insurance with your rental agency is to prevent it from being able to come after you if you run into a problem with your rental car.
There are four main types of rental car insurance in Canada. You may be required to add all four to your bill to ensure full protection or you may be able to pick and choose based on what coverage you already have from other sources.
Loss damage waiver (LDW) or collision damage waiver (CDW) insurance protects your rental car for damage up to its original value in most cases. This coverage ensures that the actual costs of your rental car will be paid for if you get into an accident or your vehicle is stolen.
This insurance costs up to $30 per day, but you may be able to decline this type of coverage if you have it on your credit card or your personal car insurance. Just be aware that your credit card coverage likely tops out at $65,000 and may not include exotic or luxury cars.
Liability insurance covers you for any vehicle damage or injury that you may inflict on other people while driving in a rental car. This type of insurance won’t cover your own medical costs or vehicle damage, so you’ll want to make sure you get extra coverage to protect yourself.
This coverage may be included in the cost of your rental vehicle already (as it’s mandated in some provinces). You may also be covered for this type of insurance by your own personal car insurance, which can sometimes extend to rental vehicles.
If you need to add this insurance on, it will typically cost you around $10 per day. That said, you may be able to turn it down if you have a car insurance policy with $1 million to $2 million in liability. You’ll just need to have an OPCF 27 endorsement on your policy, which is a bit of fancy paperwork that states that your coverage extends to your rental car.
Personal accident insurance (PAI) is meant to cover any costs that you might incur for your own medical bills in case of an accident. It’s also extended to any passengers you might have in your vehicle (though passengers are typically insured for less).
Depending on your insurer, you’ll usually pay around $10 per day for this coverage, which may or may not include accidental death and dismemberment (AD&D). This type of insurance is a safe bet for drivers who aren’t covered to drive rental cars under their personal car insurance.
Personal effects coverage (PEC) is typically bundled with PAI to give you coverage for any belongings you carry with you in your rental car. This means that you’ll get a certain amount of money back if your possessions are stolen or get damaged in a collision.
This type of insurance costs up to $5 per day and typically covers you for about $500 worth of stuff. It isn’t as necessary as some of the other forms of insurance, especially if you don’t intend to be travelling with anything valuable.
Whether you should purchase rental car insurance will depend on a number of different factors. These can include what other types of coverage you have through your personal car insurance, travel insurance, home insurance or credit cards. They also include what type of car you want to rent, whether you’re visiting from overseas and whether or not you want extended coverage.
One of the main benefits of purchasing car rental insurance with your rental agency is that you’re guaranteeing that it can’t come after you in case of a problem with your vehicle. If you rely on another form of insurance, such as your credit card, it could take a long time to process your claim. This could cause issues with the rental agency pursuing restitution in the short term.
There are a couple of scenarios where you might want to pay more for full coverage. These include the following:
Paying for car rental insurance is a bit of a double-edged sword. On one hand it can give you peace of mind while on the other hand it can add unnecessary expenses to your trip. The best way to avoid paying for insurance is to look into what’s covered under your other policies, such as your life, home, car, travel and credit card insurance.
There are a couple of incidentals that won’t be covered by car rental insurance. For example, you may not be covered for damage to the tires or cracks in your windshield due to the frequent nature of these types of events.
You may also void your rental car coverage if your vehicle gets damaged or stolen due to gross negligence on your part. This could include driving under the influence or leaving your vehicle unlocked or unattended with the keys in the ignition.
The best way to find out what’s excluded is to carefully read your car insurance contract before you sign on the dotted line.
There are a handful of ways to drive the price of your car rental down. You may be able to test out the following tips to save a few bucks on your next trip:
Many premium, travel and business cards offer car rental insurance as an added feature. This will most often cover you for damage and theft to your vehicle (though it won’t cover you for medical or legal costs in a collision). You may also find that your credit card includes roadside assistance and discounts on fuel and car rentals.
Most credit card companies will need you to turn down the rental company’s CDW or LDW insurance to qualify for their insurance. You’ll also have to charge the full amount of the car rental to your credit card and you’ll need to borrow it using your full legal name. In addition, most credit card rental coverage will only cover the primary cardholder – so be careful who you let behind the wheel of your rental.
Rental car insurance is a necessary expense for some, but it can be substituted by other forms of insurance in many cases. Find out how you can avoid paying for car rental insurance at the counter and learn when it might make sense to do so.
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