When renting a car, the rental company will typically ask if you’d like to purchase insurance coverage for the vehicle. It’s at this point when you have to ask yourself: Do my personal insurance policies provide the coverage I need, or should I purchase insurance through the rental car company?

In many cases, your personal auto policy extends a variety of insurance protections to cars you rent on a short-term basis in the U.S. and Canada. BUT, there could be potentially significant limitations to that insurance protection, which can be picked up by purchasing the Loss Damage Waiver (LDW) from the rental car company.

Limitations in Your Personal Auto Policy Can Be Covered by the LDW

Your personal auto policy will only cover damage to the rental car if you have Collision and/or Comprehensive insurance on at least one vehicle listed on your policy. For example, if you rear-end someone with your rental car, you must have Collision coverage on at least one car covered by your personal auto policy to cover the damage to the rental car.

If you do not carry Comprehensive and/or Collision on at least one car on your own insurance policy, you will not have this protection for the rental car. Purchasing the LDW can give you this protection.

Key point: If your personal auto policy excludes the coverage type that damages the rental car—and you reject or violate the damage waiver—YOU are personally responsible for paying all costs out of your own pocket.

In the event that you DO carry Comprehensive and Collision, there are still some charges and fees that may not be picked up by your personal auto policy. This includes your deductible, the loss of use (or downtime while the car is being repaired), the diminished value of the rental car and other administrative fees which sometimes can amount to hundreds of dollars or more.

Another consideration should be the potential administrative hassle of a claim between you, your insurance carrier and the rental car company. This typically involves a lot of paperwork and communication back and forth which can be reduced or eliminated with the purchase of the LDW.

*One restriction to keep in mind: never allow anyone to drive a rented car that has not been approved and added to the list of drivers on the rental agreement.

In Conclusion

  • When renting a car in the U.S. or Canada, your personal car insurance policy could very well provide some of financial protection you need but very likely will not cover every dollar.
  • When traveling outside of the U.S. and Canada, your domestic family auto policy will very likely not provide any insurance protection for you or your family.
  • The company may offer you coverage for accidental death, trip cancellation, or damaged luggage. Don’t purchase this without talking to us first. You may already be covered for these through your homeowners, health and auto policies.
  • Your credit card company may provide insurance coverage, so check with them before purchasing the LDW.

Ask About Your Policy

Deciding on your rental car coverage can be a tricky endeavor. If you have any questions or are unsure if rental vehicles are covered under your policy, contact us at Neckerman Insurance Services today.


Information from Independent Agent Magazine.