Rental Car Insurance: Definition
Rental Car Insurance that is offered in the office of a rental car company is actually a Collision Damage Waiver (CDW) or it is also called Loss Damage Waiver (LDW). It is a particular type of insurance that typically covers a damage / loss should an accident occur. Typically an auto rental company charges you about $20 per day for this insurance (which is not really cheap). There are couple things that you want to understand when getting this insurance:
1. What’s covered – is that only damages to a vehicle or 3rd party liability is covered as well?
2. What are coverage limits – often these limits can be low (e.g. minimal limit required by law) whereas accidents with bodily injuries can add up to huge amounts?
3. What are exclusions – e.g. some Collision Damage Wiavers may not cover driving on unpaved roads?
Your Auto Insurance and Collision Damage Waiver
Getting a Collision Damage Waiver is definitely better than not having insurance at all but there is often a better alternative: Your own Auto Insurance. Many providers offer so called additional pieces of protection (also called riders) which will also protect your rental car. That may cost you only additional $30 per year on top of your usual premiums.
One additional word on credit cards rental car insurance. In fact, it is a Collision Damage Waiver for Rental Cars. An important thing to know about it is that it does not cover 3rd party liability and your personal injuries. Also in order to use it you need to pay your rental car with this credit card and decline a collision damage waiver offered by an auto rental company. This insurance is typically limited in time (e.g. not longer than 48 consecutive days). If you have a non-standard car (e.g. very expensive rental or cargo vans, pick up cars etc – these might be not covered) you need to check if your card’s insurance cover them. Due to many aspects of that protection that you need to consider, the best approach would be still going with your own car insurance policy extended for rental cars.
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