Beware of LDW-style car rental coverage being sold by major online travel agencies like Orbitz ($9 a day). The same caveat about LDW's applies to these plans—you are probably already covered.
In many cases, LDW's duplicate your own personal auto insurance coverage for car rentals, as well as any credit card coverage you may have. In fact, buying the LDW usually negates any credit card insurance protection for rental cars. However, you should consider purchasing LDW's:
- if you do not have personal auto insurance;
- if your personal coverage levels are not high enough;
- if the car you rent is not covered under your own policy;
- if you are renting a car outside the U.S.; or,
- if you do not wish to be responsible for repair bills until your insurer or credit card company reimburses you for the expenses.
Also, you should be aware that LDW's sometimes include exclusions that may leave you liable for certain types of damages such as a broken window or a torn seat cover. Also, LDW's may be voided:
- if you use the rental car to carry people or property for hire or to tow another vehicle or trailer;
- if you allow an unauthorized person to drive it;
- if you use the vehicle for illegal purposes;
- if you obtain the vehicle from the rental car company under false pretenses;
- if you take the car outside the geographical boundaries mentioned in the rental agreement; or,
- if you damage the vehicle through misconduct (such as speeding or driving on unimproved roads).
Beware of high-pressure sales tactics by rental counter agents to convince you to purchase LDW's. For example, some companies train their agents to create doubt in your mind by asking whether you are absolutely convinced that you are covered for any accident or whether you know how much a new car costs to replace. In extreme cases, agents have threatened to deny the car rental, claimed that the traveler will be held in the state until all repair bills are paid if an accident occurs, limited the availability of vehicles, or required additional cash or credit deposits. Report such practices to the attorney general in the state in which you rented the car. You are within your rights to demand a full refund from the rental car company.
Some states have taken extra steps to protect consumers against LDW abuse. For example, California requires rental car companies to disclose to renters the full details of how their
LDW's work compared to the renter's existing insurance plans. However, New York legislators repealed in January 2003 a longstanding ban on selling LDW's in that state.
Personal Accident Insurance
Personal accident insurance (PAI) pays medical and ambulance bills for drivers and passengers in a rental car that result from an accident. You will not typically need PAI coverage if you carry personal car insurance that applies to rental vehicles or if you have health insurance coverage. Always check the specific terms of your existing policies, as well as the list of exclusions in any PAI policy that you purchase from the car rental company.
Personal Effects Coverage
Personal effects coverage (PEC), also called theft insurance, covers your personal belongings if they are lost or damaged due to theft or accident involving the rental car. Generally, PEC policies cover you, your immediate family members, and any additional drivers listed on the rental agreement and their immediate family members as long as the affected individuals are traveling in the car with you.