If you’re flying out of town and need to get around in the city you're visiting, you may need to rent a car while you’re there. If you book your rental car using your credit card, you may be insured in the event of an accident. Not all credit cards cover damage to rental cars, though. If your card doesn’t offer this coverage, you can buy coverage through the rental car company. Buying it can be confusing, though. You may still be left wondering what the extra insurance covers. Does it cover every incident?
While you'll be covered if something happens to the rental car, you won't be covered for everything. There is insurance you can purchase that will cover the gaps. It's called additional liability insurance (ALI). ALI insures all authorized drivers if they injure someone or damage someone else’s car while driving the rental car.
This can be vital coverage for drivers who do not own a car or a car insurance policy. If you are an insured driver, you are most likely covered by your car insurance.
Don't assume you're covered. Check with your own auto plan to find out if it covers you for liability issues while you're driving a rental car.
You are able to purchase ALI through the rental agency when you rent a vehicle. For instance, assume you took a vacation in Arizona and rented a car. While driving to your hotel in your rental car, you pulled out in front of a car that had the right of way and you caused a wreck. Two people were injured in the other car, and a lot of damage was done to their vehicle. If you bought ALI with the car rental, it would cover the injured party's medical bills and damage to their vehicle.
ALI would help in this respect, but do you need to purchase ALI? It depends. If you are covered by your own car insurance or credit card, there is no point in spending more for double coverage.
Decide Whether You Need More Coverage
You may not need a higher limit of liability coverage on a rental car than you have for your own car. On one hand, you drive your own car more often, which may increase the risk of an accident. On the other hand, a rental car may handle and drive differently than yours. You may be in an area you've never driven in before, which can make a wreck more apt to happen.
If you are thinking of adding to your liability coverage for a rental car, think about making the change on your personal policy. Most of the time, your existing liability policy extends to a rental, which means you may not need to purchase more coverage with the rental car.
Having your state's minimum liability coverage may not cover the costs you incur in a wreck in another state, though. The standard liability limits, also called split limits, are 100,000/300,000, though some states require less. These number mean that up to $100,000 can be paid out per person and up to $300,000 per accident. Higher limits are available and recommended to protect your assets.
If you are a person who travels a lot, you could purchase umbrella coverage on your own policy, which will offer extra liability coverage.
Collision Damage Waiver
You might also think about buying collision damage waiver (CDW) with your rental car. CDW can be the most costly coverage to get for a rental car. A CDW can be vital to you because you are in essence paying the car rental company to not hold you liable for any damages or losses that take place while you a driving the rental.
A CDW may not cover any liability you might incur when driving a rental. It also will not cover any driving acts that are risky or illegal. Keep in mind a CDW might be offered through your credit card if you use the card to rent the car or through your own policy. You should check with your card company to see if you are covered in a rental car.
A Final Thought
Knowing the type of coverage you have and need when renting a vehicle is vital. Being aware of this will allow you to make coverage choices that will be best for you when you use a rental car.