Peter Greenberg: Is Rental Car Insurance Necessary?

By: Peter Greenberg | Source: AARP.org | 2008-11-06

Thank you for the article on rental car relief. Most rental car companies try to sway you with hard-sell tactics to buy insurance. Is it really necessary?
-Luis, San Antonio

Some rental companies do wait until the last minute to hard-sell insurance options, so it is best to consider the options beforehand. The most important thing is to figure out what auto insurance coverage you already have. Most auto insurance companies offer at least basic coverage on rental cars with their standard policies.

Most rental companies offer the following types of optional insurance: CDW (collision damage waver) and LDW (loss damage waver) covers vehicle damage by accidents, vandalism, or theft; SLI (supplemental liability insurance) provides excess liability coverage of up to $1 million; PEC (personal effects coverage) protects your personal items in the car; and PAI (personal accident insurance) covers any medical expenses for the people inside the car. But with most auto insurance, you'd already effectively have CDW, LDW and PAI coverage. The SLI would only come into play if you caused a massive pile-up where damages reached well into the hundreds of thousands. PEC is usually covered by auto insurance and/or renter's or homeowner's insurance.

Again, rental car insurance is usually not necessary domestically, since you are fairly likely to be covered by your own insurance company. (Although you definitely should check your insurance to make sure, well before you arrive at the rental location.) Most U.S. insurance companies do not extend their coverage once you leave the country. So if you are traveling abroad, then rental car insurance is usually necessary.