Everything You Need to Know About Car Rental Insurance

Insurance Insights | May 12, 2021

Everything You Need to Know About Car Rental Insurance


Rental car insurance may protect you from incurring any additional unnecessary costs while travelling, although safeguarding you, your belongings, and the rented vehicle you will want to make sure that it is the right decision for you.

Currently, there are many avenues that may already provide you with car rental coverage including your current car insurance policy, home insurance policy, or travel credit card.

It’s important to know what kind of coverage you currently have to avoid any unnecessary (and duplicate) costs.

All rental cars insurance offer four basic types of coverage:

  • Personal effects coverage (PEC)

  • Loss damage waiver (LDW) / Collision damage waiver (CDW)

  • Liability (LI)

  • Personal accident insurance (PAI)

1. Loss Damage Waiver / Collision Damage Waiver

This type of insurance will protect you should any damage or theft happen to the car however it is wise to note that your credit card or current car insurance policy may already have you covered. Most insurance policies do, so read the fine print carefully and see where that leaves you.

Should you need it, the cost ranges anywhere from $10-$30/per day.

The purpose of this waiver is to prevent the car rental agency from pursuing you for any damages or losses to the car.

2. Personal Accidental Insurance (PAI)

This insurance policy covers any accidental death or injury coverages towards the driver and any passengers up to $100,000. Drivers are typically covered for up to $100,000 while passengers receive $10,000.

If your current auto insurance does not cover this it is highly recommended to safeguard yourself in the event of an accident.

$7-$10 a day is a small fee to pay to cover any injuries you and your loved ones may incur.

3. Liability Insurance (LI)

This one is highly recommended as well unless you already have coverage through your own auto insurance policy. This will protect you from being liable in the event that you are in an “at-fault” collision.

Liability insurance will cover the cost of damage towards the other person and their vehicle including medical benefits to anyone injured.

This type of insurance usually ranges anywhere from $15-$30 daily.

4. Personal Effects Coverage (PEC)

This coverage was created to protect your personal belongings. This will give you peace of mind should any of your or your passengers’ personal belongings be stolen or lost.

Be warned, if you currently pay for home insurance you are already covered, however, this is a good one if you don’t want to worry about the risk of losing something valuable.

Often this coverage requires a deductible payout per person.

All of these insurance options are there to safeguard you against any additional costs and protect yourself, your passengers, the rental vehicle, your belongings, and any injuries that may occur. However rental insurance comes at an additional cost, so it’s still something that should be considered.

You may want to consider car rental coverage if

You don’t have car insurance and your credit card or home insurance does not provide coverage

Always read the fine print before purchasing anything. Certain credit cards will offer auto rental insurance as part of your current plan. Your auto insurance and home insurance policies may also cover a portion of your car rental policy so double check before you agree to purchase additional rental insurance.

You can’t risk a claim against you

If you already have a few accidents under your belt and are a high-risk driver it is recommended it is worth ensuring that you have all of your angles covered.

You are traveling on business

If you are traveling for business or for professional reasons you will want to ensure that your company is paying for both the rental car and the insurance.

Renting sport or luxury vehicles

These cars have a much higher replacement value than typical vehicles, so it’s much better to be safe than sorry in this case.

Some policies have border regulations. You will also want to ensure your policy covers you across North America, Europe, and the country you will be visiting.

Have more questions? Get in touch today. We’re happy to help!