We at Surround have been traveling around the country chatting people up about their best and worst insurance moments. One universal least favorite is the decision at the rental car counter. You know the moment – you’ve rolled off a long flight and just want to get to your destination. Suddenly, Sal behind the counter is trying to convince you to buy obscurely named rental car insurance while the forty-two people in line behind you fidget and mutter. LIW? CDW? WTH?
Yup, deciding on rental car insurance can be an incredibly pressure-filled moment. And a bad decision can lead to a very expensive mistake. We at Surround hate those negative life lottery moments, so we want to help you make an informed decision about rental car insurance.
What Is Rental Car Insurance?
First, here’s your decoder ring for the insurance Sal’s trying to sell:
Coverage Descriptions and Cost
- Collision Damage Waiver (CDW) = damage to your rental car, $25 - $35 / day
- Liability Insurance Supplement (LIS) = injuries or damage you cause in an accident, $12 - $15 / day
- Personal Effects Coverage (PEC) = your damaged personal property, $3 / day
How Do I Know If I Need Rental Car Insurance?
Wait, you say…rental car insurance costs more than renting the actual car does?! Do I really need this…stuff? Here’s our secret two question quiz that will help you crack the code:
Question 1: Do you already have an auto insurance policy?
For people who have their own car and are concerned about things like, you know, legality and responsibility and being sued, the likely answer is “Yes” since auto insurance is mandatory in almost every state. Do you know if you have comprehensive and collision coverage on your policy, the coverages that pay for damages to you car? Go check. It's relevant.
If you don’t have a car, you probably don’t have a personal auto insurance policy (although you really should consider a non owner auto policy). Making an informed decision at the car rental counter is especially important for you, since you might not have another source of rental car insurance coverage if you get into an accident.
Question 2: Does your credit card include car rental insurance?
Many do these days, especially premium cards. However, there’s a catch. As we talked with consumers, we learned there are two types of people: those who always buy all of Sal’s insurance and those who assume their credit card company provides rental car insurance.
You, the members of that second group, we worry about you. Yes, many credit cards include some kind of car rental insurance. However, it usually (but not always) does not cover liability. In addition, there’s often a dollar limit to how much damage the credit card company will pick up. Your Mustang Convertible upgrade won’t be such a deal in this scenario if you total it.
Long story short, don’t assume - check exactly what rental car insurance your credit card provides.
LIS - You can confidently decline LIS if you have a personal auto insurance policy for your own car, or if your credit card happens to provide LIS coverage. (You did check, right?)
CDW - Go ahead and decline if you have comprehensive or collision on your own personal auto policy, or if your credit card picks up CDW.
PEC - Your choice, but not worth paying for for most people. Your stuff may be covered under your renters or homeowners policy anyway.