Posted: 10.05.2010
Renting a Car? Make Smart Choices Before You Visit the Rental Counter

During the holiday season, millions of people hit the road. Many of those who decide to rent a car may not fully consider the need for rental car insurance until they get to the counter, resulting in costly mistakes, according to the Insurance Information Institute (I.I.I.). 

“Faced with a number of choices, some renters either purchase all of the coverage or they decline the insurance without knowing if they are covered by other policies. This can result in either wasting money by purchasing unnecessary coverage or having gaps in coverage, making the driver dangerously uninsured,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I.

Many car rental companies now impose various fees after an accident that you may not be aware of and will be held responsible for. These fees can include: towing, storage, impound fees, loss of use, diminished value and administrative services.

“Administrative and diminished value fees vary widely, costing anywhere from several hundred to several thousand of dollars if you are involved in an auto accident,” noted Salvatore.

Before renting a car, make two phone calls—one to your Brown & Brown insurance agent and another to the credit card company you will be using to pay for the rental car.

Rental car insurance offers four important coverages:

1. Loss Damage Waiver (LDW), also referred to as collision damage waivers is not technically an insurance product—it relieves or “waives” renters of financial responsibility if a rental car is damaged or stolen. In most cases, waivers also provide coverage for “loss of use,” in the event the rental car company charges the renter for the time a damaged car cannot be used because it is being repaired. It may also cover towing and administrative fees. Loss damage waivers cost between $9 and $19 a day.
2. Liability Protection provides financial protection from lawsuits in the event you are sued following an accident involving a rental car. While by law, rental companies must provide the state required amount of liability insurance, generally, these amounts are low and do not provide much protection. Furthermore, the company has the right to recoup any monies it pays out from the renter. You should probably only forgo the additional liability protection if you have adequate amounts of liability protection on your own car. If you decide you want the supplemental insurance, it will cost between $7 and $14 a day.
3. Personal Accident Insurance will cover you and your passengers for medical and ambulance bills incurred by injuries in a car crash. If you have adequate health insurance or are covered by personal injury protection under your own car insurance, you may not need this additional insurance. It usually costs about $1 to $5 a day.
4. Personal Effects Coverage provides insurance protection for the theft of items in your car. If you have a homeowners or renters insurance policy that includes off-premises theft coverage, you are generally covered for theft of your belongings away from home, minus the deductible. Personal effects coverage generally costs between $1 and $4 a day.

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