Understanding Car Rental Insurance

The moment you walk into the car rental company, you are flooded with several options after having decided to rent a car. This leads many of us to stop and think, "Do we need to accept all of the various types of car rental insurance?" Well, you do not have to. Car rental insurance, for example, is optional in almost every state of the country barring Texas . There are, however, some points to be kept in mind.

Car rental agencies make a nice profit from the insurance coverage they offer you, so it is important to understand what each one does and to know which is worth actually buying.

1. Damage caused to the rented car: Among most car rental insurance agencies Loss Damage Waiver, known in short as LDW is the most common form. Irrespective of the manner in which the damage is caused, this covers only the damage caused to the rented car. For example, if the car collides with a tree then the damage will be considered but if the car collides with another car then the damage caused to the rented car will alone be considered.

When you rent a car, ask the agency whether they have a cover known as Loss Damage Insurance (LDI). Many smaller car rental agencies do offer it. The insurance cover is similar to another cover called LDW except that in LDI, a third party collects the fees.

Most car rental agencies are self-insured and pay monthly contributions to a communal fund that covers the claims for damages. For that reason, LDW is the preferable option because it covers the damages even if the car is damaged beyond repair.

LDW can be either complete or partial. Full Waiver, albeit with some variations, is what can be found on offers everywhere across America. In the case of Partial Waiver, the insurance coverage is limited to a certain dollar amount.

2. Coverage to other parties' property and person: Coverage under Additional/Supplemental Liability Insurance (LIS or SLI) is set at a specific dollar amount (generally up to one million dollars). This coverage is for damages to other persons or their property, either by the policyholder or by another person authorized to drive by the policyholder.

3. Personal Effects: Insurance coverage called Personal Effects Protection (PEP) is extremely economical and important. This coverage typically covers accidents, theft and other losses you may sustain while traveling. Coverage is for a specified amount and can run around $2/day. Once you meet your deductible the insurance kicks in to cover up to the policy limit.

4. Personal Accident protection: This is another policy available at an economical fee of somewhere up to just five dollars to be paid per day. This provides insurance up to an amount of 100,000 dollars to the driver and more often than not, the complete travel entourage, in case of accidents while traveling by car. In addition, the driver whose name appears as the renter on the contract is usually covered every moment of the trip.  For those who do not possess travel insurance or haven't gone in for personal medical insurance, this policy will prove very useful as it provides complete coverage during your travel. All those who do not live in the United States or those who travel abroad without personal travel insurance will do well to give this protection serious consideration.