Is it a good idea to buy car rental insurance?

However, one expert reveals that car rental companies do not offer insurance.

“Car rental companies insure their fleet, so what they offer isn’t really insurance,” writes Matt Hands, business director of insurance on the comparison website .. “Your money is spent on overall funding, so if you pay for different coverage options, that means they can’t claim damages from you.”

read more: “More Canadians need car insurance than we can deploy” –

He adds that when it comes to buying car rental insurance, drivers pay for “knowing the rules” to “make smart, informed, and economically savvy decisions.”

According to Hands, the four types of coverage offered by car rental insurance are:

1. Collision Damage Exemption (CDW) or Loss Damage Exemption (LDW)

This exemption only protects rental cars. Similar to standard car insurance crash and comprehensive insurance, it covers the cost of something happening to your rental car such as fire, theft or accident.

According to insurance firm, car rental companies are also beginning to charge additional fees in the following cases:

  • Lost revenue while repairing a car
  • Administrative costs to process repairs
  • Towing cost
  • Depreciation of vehicle resale price after accident

Hands, meanwhile, reminds the driver that the CDW or LDW is not an insurance policy and “signing the contract will pay the car rental company to waive the right to pursue damages or losses.” Said.

2. Liability insurance (LI)

Liability insurance protects a driver if he or she makes a mistake in a collision and causes damage or injury to another person or his or her property. This type of compensation pays for accident-related costs, such as medical costs and vehicle repairs.

3. Accident insurance (PAI)

This will allow anyone in the rental car at the time of the accident to be compensated for death and dismantling due to the accident. Benefit packages vary by car rental company, but generally drivers cover up to $ 100,000 and passengers are eligible to pay up to $ 10,000.

4. Personal coverage (PEC)

Also known as personal belongings protection, it is intended for the driver’s personal belongings if they are lost, damaged or stolen in the rental car. In many cases, coverage is limited, usually $ 500 per passenger, and a deduction (usually $ 25 per passenger) is also required before the claim is paid.

How much does car rental insurance cost? pegs the cost of each type of coverage at the following price points:

  • CDW / LDW: $ 9 to $ 30 per day
  • LI: $ 15 to $ 30 per day
  • PAI: $ 7 to $ 10 per day
  • PEC: $ 2 to $ 5 per day

Based on these, if the driver chooses to purchase all available coverage, car rental premiums can range from $ 33 to $ 85 per day. This can easily cost about $ 230 to $ 595 a week, so Hands has “covered as needed” to avoid paying “additional charges that you don’t have to pay in the first place” to the car rental company. Understand and fill the gap. ”

read more: How Price Comparison Sites Save Canadian Car Insurance Costs

When is a good idea to buy car rental insurance?

However, there are some situations when buying car rental insurance is a logical choice. Here are some of them, according to

  • The driver does not have car insurance
  • Driver’s credit card does not provide car rental compensation
  • The driver’s car insurance does not have a proper guarantee to allow the transfer to a rental car.
  • Car rental companies are considered high risk and cannot tolerate the risk of another claim
  • The driver is on a business trip. This means that if the person who rented the car is insured, the employer must be insured.
  • Drivers rent sports cars, trucks, luxury cars or special vehicles
  • Driver car insurance covers only the bare minimum
  • Drivers are traveling outside of North America, which is no longer covered by standard car insurance.

Do I need to buy car rental insurance?

Experts also advise you to reconfirm the coverage that the car rental company already has, as car rental insurance may already be covered by these insurances. These include:

1. Personal car insurance

Most car insurance companies in Ontario offer additional coverage for cars they don’t own, formally called the Ontario Policy Change Form (OPCF) 27. Other states offer similar support. QEF27 in Quebec and SEF27, a private insurance company in Alberta and the Atlantic Coast of Canada. If your driver’s car insurance includes these guarantees, you do not need to purchase additional coverage from the car rental company.

2. Free compensation from credit card

Many credit cards have already done collision damage to rental cars. To be eligible for this compensation, the cardholder must charge the credit card for the full rental and refuse to be exempt from collision damage provided by the car rental company.

However, according to the consumer website, third party liability is not covered, as car rental insurance that can be obtained by purchasing travel insurance with a credit card is often capped. You need to check the limit.

3. Compensation for personal belongings in home insurance

Homeowner, condo, and lessor insurance policies provide content coverage that extends to personal belongings lost or damaged outside the home, including rental cars. If you already have home insurance, you can choose not to get compensation for your personal belongings.

4. Life insurance

People with short-term or long-term disability insurance life insurance or group health insurance can choose to be exempt from personal accident insurance. However, experts suggest that policyholders first check with the insurance company to ensure complete coverage from the accident.

5. Travel insurance

According to, some travel cancellation, travel health, and medical evacuation insurance policies can include car rental coverage as an add-on. This often covers lost or damaged vehicles. Some policies also cover towing, rescue, fire department costs, and costs associated with the loss of reasonable use.

Is it a good idea to buy car rental insurance?

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