Published on August 11th, 2016 | by Rodrigo Cokting
Should you buy extra protection when renting a car?
If you’re used to renting cars, this is a familiar scene: you’ve made an online reservation at one of the major rental agencies (using your member-exclusive CAA discount, of course) and when the day comes, you show up to the counter. The agent who’s busy processing your reservation suddenly looks up and asks: Do you need extra protection?
There is no one right answer to that question. It depends on a number of variables, and you should take the time to evaluate your specific situation and needs before renting your next car. Here are the main factors to consider so that you’re adequately covered in case of a mishap.
What’s being offered to you exactly?
Typically, a rental company will offer you a Loss Damage Waiver (LDW for short) which, in plain English, means that the company waives their right to make you, the renter, pay for loss or damage to the car. Note that this coverage is limited to the rental car itself – damage caused to other vehicles or property is not covered by a LDW.
Other types of protection are also commonly offered, including third-party liability, accident benefits and personal effects coverage. This extra protection varies by region – in Canada, as well as in the United States, jurisdiction over auto insurance falls predominantly to the provinces and states, so scenarios will vary based on where you’re from and where you’re renting the car.
Check your own auto insurance policy
If you own a car, your personal auto policy may well provide some form of coverage on rental vehicles. That said, if you only signed up for minimum liability coverage on your personal car, that same basic coverage is what you’re going to get on the rental. In that case, it might be worth opting in to the rental agency’s extra protection, if only for peace of mind. (Even minor damage to a brand new car tends to be quite expensive.) And even if you do have full coverage on your personal car, you should not automatically assume that the same coverage extends to your rental. Some insurers will only provide basic liability coverage on rentals. Give a call to your insurer if you’re unsure.
Check your credit card benefits
Before you decline the rental agency’s extra protection, know that rental car coverage is typically offered on premium credit cards that have an annual fee. Also, some credit cards only offer what’s called “secondary insurance”, which means that if you have a personal auto policy, any insurance claim will need to be made with your primary insurer first, which could end up raising your insurance premium come renewal time.
Finally, credit card companies typically have restrictions on the type of vehicle allowed and also a limit on the value of the vehicle that they’ll cover: double check those restrictions very carefully before you agree to rent a luxury convertible or a large moving van, as those may well fall outside of the protection offered by your credit card issuer.
For more information, the Financial Services Commission of Ontario has produced a brochure that is also available online: https://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_renting.aspx
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