The correct response to the question whether or not you need coverage for collision damage waiver (CDW) really depends on your specific rental needs. Your payment method and location also form part of the decision process. When the agent at a rental car company asks if you require cover for CDW and LDW (Loss Damage Waiver), LIS (Liability Insurance Supplement), PAI (Personal Accident Insurance), or PEC (Personal Effects Coverage), they are naturally trying to upsell.
CDW and LDW
CDW and LDW are two types of rental car insurance offered by most rental car companies. CDW, or collision damage waiver, is insurance that covers damage to the rental car if it is involved in an accident. LDW, or loss damage waiver, is insurance that covers the cost of the rental car if it is lost or stolen. Rental car companies may use these terms interchangeably so it’s important to ask them what their policy covers specifically.
Both CDW nor LDW do not cover the cost of damages to other property, such as another car. It’s also important to note that both types of insurance are optional. You don’t need to purchase them to be able to rent a car.
You can purchase a CDW or LDW from the rental car company when you book or pick up your car. An alternative to CDW and LDW is a damage cover from an independent rental car insurance company such as Bonzah, which ensures you have insurance coverage should you damage your rental car in an accident.
Similarly, liability Insurance Supplement (LIS), Personal Accident Insurance (PAI), and Personal Effects Coverage (PEC) are all optional insurance add-ons that you can purchase if you need or want adequate coverage.
LIS provides coverage for you and other drivers listed on the rental agreement for your rental vehicle in relation to third party claims for injury or damage.
Personal Accident Insurance (PAI) covers medical expenses for you and your passengers if you're in an accident while Personal Effects Coverage protects your belongings in case they're damaged, lost, or stolen from the rental car. These are generally sold together by most rental car companies.
CDW, LDW, LIS, PAI and PEC Cost
Below is a breakdown of the most recent prices of CDW/LDW, LIS, PAI and PEC:
Based on the table above, you can expect to pay anywhere between $24 to $45 per day for CDW or LDW should you decide to opt in when renting from the major car rental companies. You should also prepare to pay anywhere from $9.99 to $14.95 daily for liability insurance supplement, and from $6 to $9.95 for PAI and PEC coverage. Meanwhile, Bonzah’s alternative to CDW - the damage cover - only costs $11.99 per day, and $11.90 should you want supplemental liability insurance coverage.
Weigh the CDW Pros and Cons
The amount you pay for CDW and LDW varies according to car rental category, location and, of course, your risk appetite. Accepting the extra cost of CDW can inflate your total rental cost by more than 100%, depending on the rental car company. Even if you are the best driver ever, accidents or even shopping carts have a nasty habit of arriving out of nowhere.
The blame may be entirely down to the other driver, or drivers in the case of a multiple pile up. The argument is not simply about taking a gamble and declining the add-on cost. It is also about managing the risk if something untoward happens.
When You Might Need LIS and PAI/PEC
If you already have liability coverage on your auto or home insurance policy, then you won't need the Liability Insurance Supplement, unless, of course, you prefer to avoid the risk of claiming on your auto or home policy, for a liability-related claim.
Again, if you have health insurance that covers you for injuries due to an accident then you won't need to purchase additional Personal Accident Insurance. Or, if you have home insurance the chances are that you won't need to buy Personal Effects Coverage.
All These Coverages Can Add Up To Be Expensive
Rental car insurance is one of those things that can add up to be expensive if you're not careful.
For example, if you were renting with Hertz from Atlanta, Georgia the cost of accepting each of the optional insurance can add around $62 per day to your rental car company bill. Ouch! So it pays to do the math before accepting or declining these coverage add-ons.
Rental car insurance can be expensive, but there are ways to save. The best way to save is by knowing what coverages you need and what coverages you don't. For example, if you have a good personal auto insurance policy, you may not need to purchase the rental car company's collision damage waiver. You can also explore cheaper CDW and LDW alternatives such as collision or damage cover from independent rental car insurance providers.
Remember to read your entire rental car company contract carefully and check your LDW & PEC options with Bonzah. Weigh the pros and cons of paying for Collision Damage Waiver coverage etc when you select your rental car, or opting for the self-insure option with Bonzah.