Get Quote

Rental Car Coverage: Do I Really Need It?


With spring right around the corner, many of us are planning those getaways that we’ve been dreaming of all winter. Whether you’re hitting the road to visit family, planning that long awaited escape to the beach, or finally fulfilling your dream of exploring Europe, if you plan to rent a vehicle, you may find yourself asking “should I purchase coverage on my rental vehicle or is it just another useless sales pitch?”

It’s easy to find yourself checking the “no” box on all the additional offers rental companies provide but when it comes to a loss damage waiver (LDW) or collision damage waiver (CDW), you may want to reconsider. Here’s why.

Despite the high cost of coverage on a rental vehicle, it could save you big bucks if the car sustains damage.
Rental companies often set the value of a car, sometimes resulting in inflated values and a potentially big payout from you should damage occur without coverage in place. When damage occurs, the rental company often immediately charges a customer’s credit card. Depending on the rental company, you could be responsible for all physical damage whether from a collision, a parking lot ding, or a crack in the glass that was present prior to your renting the car but not discovered until your return. Finally, rental companies can hit you not only with repair costs but also with loss of income and administrative fees.

Your personal auto policy provides only limited coverage on a rental vehicle.
Your personal auto policy provides liability coverage for the US and Canada. If you’re traveling outside those regions, you will need to purchase coverage that includes liability and physical damage. If you have collision coverage on an existing vehicle on your auto policy, it may transfer to a rental car. On the other hand, your auto policy may exclude comprehensive on a rental. This is where the loss damage waiver (LDW) comes into play. The LDW may include exclusions that could be covered by your personal auto policy. Likewise, your personal auto policy can fill in the gaps left by the LDW. Yes, it’s complicated, so if you want adequate coverage make sure you have both.

Read the fine print.
Always be an informed consumer! Read through the agreements to ensure you have the right coverage and can be confident that you are making the right choice. You’ll also need to be aware of the exclusions. For example, an unauthorized driver can invalidate coverage so make wise choices when operating a rental vehicle, even with the LDW in place.

So, do we recommend purchasing coverage on a rental vehicle?  The answer is “yes,” especially on short term rentals. In the end, you will have to assess whether that is the right decision based on your specific situation. But remember, while it may just seem like one more fee, failing to pay for coverage on that rental vehicle can end up leaving a big dent in your wallet.

For more information, see Top 10 Reasons to Purchase the Rental Car Damage Waiver.