Rental Car Insurance

Ah… a vacation at last.

You and the family have arrived at your destination. You’ve collected the luggage and take a tram to the rental car facility. As you’re renting the car, the rental car representative asks, “So, do you want to purchase the loss damage waiver?” You look at your two, under age 10 children and your wife. You realize you’ll probably be traveling about 300 kilometres. You ask the rep what the insurance costs are and wince at the response. You look over at your family excitedly chattering a few metres away. You think: Do I really need rental car insurance? You ask: “Doesn’t my auto policy cover this?”

Rental car insurance representatives

Perhaps you meant to ask your agent about whether your auto policy covers a rental car but, forgot in the frantic preparations for the holiday. So, here are a few things to keep in mind about rental car insurance:

  • The rental car representative you’re working with is not an insurance expert. They are not familiar with insurance laws in the provinces. And they certainly don’t know (and probably don’t care) if your personal auto policy covers rental cars.
  • They may suggest that you’re personally responsible for any damage that occurs to the car.
  • They may suggest that coverage is required.

Both of those inferences are probably not the case.

Rental car coverages

You will have to accept or reject the rental car damage waiver before you take a collection of the hire vehicle. It can be called:

  • Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) – An agreement by the rental company not to hold a consumer liable for loss from all or part of any damage to the automobile.

    Note: Although it meets the basic definition of insurance because there is a transfer of risk from the car renter to the rental company since rental car companies are not licensed to sell insurance, they cannot offer the CDW or LDW as insurance.

Rental car insurance coverage options

There are three other possible options where you might be covered for insurance while you drive a rental car:

  • Credit Card – Many credit card companies offer LDW for free or for a small charge if the car rental charge is paid in full with that credit card.
  • Travel Plans – You may be able to purchase this for a small fee if plan points are used for the rental.
  • Travel Insurance – If you’ve purchased travel insurance, rental car coverage might be included in the plan.
  • Personal Auto Policy – If you have full coverage (collision, comprehensive, and liability), their corresponding deductibles, exclusions, and limits will transfer to the rental vehicle. This means that your personal auto policy will pay for any property damage and bodily image up the limits.

Check with Alpine Insurance in Calgary, Lethbridge, Edmonton, Canmore, or Red Deer to make sure you’re covered while driving a rental car.

Note: The cost of a CDW waiver can be very expensive. In fact, it can cost from 20% to 50% of the rental car contract depending on where you are.

Who buys rental car insurance?

Keep in mind that if you don’t carry collision and comprehensive on your personal vehicle, you will not be able to use the policy if your rental is damaged in an accident, stolen, vandalized or damaged by hail or other perils.

If you don’t have this coverage, you can do one of two things:

You can take a chance and not purchase the CDW or LDW and hope you do not encounter any problems. You may save a few dollars but it may not help your peace of mind, especially if you’re unfamiliar with the area.

You can purchase the CDW or LDW.

If you don’t have a vehicle, you’re not going to have car insurance. In most provinces, however, rental car firms are required to provide a minimum amount of liability coverage. It will be equal to the province’s minimum liability limits.

So, when you’re ready to go on holiday and need some advice on rental car insurance and how it relates to your personal auto policy, talk to your trusted insurance advisor at Alpine Insurance in Calgary. Make sure you’re protected, especially if you’re travelling in unfamiliar surroundings.


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