Do You Need Rental Car Coverages?

Everytime you rent a car you get asked by the agent, “Do you want to purchase the optional coverages?” The question is should you sacrifice the extra money for the coverage, or should you pass on something that might be totally unnecessary? And are the coverages worth it? These are all valid questions, so read on to learn the basics of rental car coverage so you can be prepared that next time you rent a car!

When you sign a rental car agreement, you agree to become fully responsible for any damage to the car while it is in your possession. However, the problem is that most rental companies expect you to pay for any damage to the car immediately, along with charging you other fees such as a “Loss of Use” fee. For example, Alamo’s rental car agreement states:

Alamo holds the renter responsible for the safe return of the rental vehicle in the same condition that it was rented, except for normal wear and tear…Unless prohibited by law, a renter may be held responsible for all damages, including loss of use, should the vehicle be damaged in an accident, stolen or vandalized. This is the case regardless of fault.

By being familiar with all of your car insurance coverages before you step up to the rental counter, you will help yourself make the smart decision and get your trip started in the right direction.


The Collision Damage Waiver (CDW) and the Loss Damage Waiver (LDW) are the most expensive of the optional coverages, but also two of the most important. While they are not actually insurance, they will waive your financial responsibility if a car you is damaged or stolen. If you bought the CDW or LDW, you don’t have to file a claim with your insurance company because those coverages will pay. However, sometimes the amount of coverage offered by these waivers vary. Some will waive all fees and charges, up to the value of the car. Others waive damages up to a set amount (from $500 to $3,000) and hold the renter responsible for the rest.

Basically, the CDW or LDW are the rental car companies version of collision and comprehensive insurance. Therefore, if you already have comprehensive and collision insurance for your own car, don’t duplicate coverage you already have. But if you’ve dropped your comprehensive and collision coverage or don’t have auto insurance, it’s worth the money. According to Insurance Information Institute (III), this coverage generally ranges from $9 to $19 per day.

Liability Insurance

For between $7 to $14 a day, the rental car company can provide up to $1 million in liabilty coverage. This coverage covers you for property damage or bodily injury you cause to another person while driving. If you are worried that your own auto policy has low liability limits, you can purchase this extra coverage and it will become your primary liability coverage.

Coverage You Already Have

If you have car insurance, the type of coverage you bought, along with its deductibles, usually applies to rental cars as well. However, don’t forget that most of your own insurance requires you to pay a deductible before the insurance company picks up the tab (there’s no deductible for liability insurance). Buying all of the insurance offered from a rental car company can double your rental costs, but buying none of it might put you in a bad financial spot if you have an accident.

Before you rent a car, the smartest thing to do is to check your insurance policies to get an idea of what coverage you will have with the rented vehicle. And while at the rental car company, take some time to find out exactly what they offer. Compare those coverages to the ones you already have. That way, you can avoid buying coverage you don’t need.

For more information on rental car coverage, or if you have any questions about anything North Carolina insurance related, visit our website or call 877-318-5951 to talk to one of our friendly agents. Also, remember to follow us on Facebook, Twitter, and YouTube for more helpful hints about all of your insurance needs!


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