Are we covered in a rental car?

Answer 1

In the first instance, it is advisable to check with your private auto and household insurance carrier. Some home auto policies cover only liability, such as death or dismemberment, and they are with tight caps. Some homeowner policies, which include auto accident coverage, but only within your country of residence.

Once you determine what, if any coverage you already have, you then enter the often confusing, and certainly complex matters relating to Hire Car coverage.

CDW, PAI, LDW, PEC, are just some of the acronyms your presented with when walking up to a rental counter. It would literally take hours to fully read the legal jargon, (and a strong magnifying glass), before anyone other than a litigation or tax attorney could sift through the myriad of exclusions, addendums, and covenants.

In most simplistic terms, the above codes refer to:

CDW: Collision Damage Waiver. This protects you from any general dents and dings you may encounter whilst having the car in your possession. Anyone who fails to have this coverage should take heed. A number of the less reputable hire companies make substantial profit from discovering otherwise elusive 'owies' your car may have encountered whilst in your control. It doesn't matter whether the dent, ding, chip, smudge, scratch, keying, etc., was there before. If you failed to bring it to the rental company's attention, and they've clearly marked and detailed it, in advance, on your and their copy of the rental agreement, you may find yourself severely out of pocket.

The companies most prolific in suddenly finding a range of indiscretions committed upon the vehicle, whilst under contract, have tended to be the franchise agencies. Whilst by no means an endorsement or recommendation, historically, frequent renters have found the the Big Three - Hertz, Avis, National, have been the most relaxed (and perhaps the most ethical), when it comes to acceptance that any vehicle will experience normal wear and tear the moment you take if off the lot. This is particularly strident when hiring a car in a Winter environment, where roads are sanded and windscreens can take a beating. An important caveat; with franchises, particularly outside of Canada, the United Kingdom, Australia and the US, you may find that a pre-paid CDW policy varies from a CDW policy offered to you at the Rental Counter when you arrive at your destination. (again, a contributing factor concerning which company you choose).

PAI: Personal Accident Insurance. Sadly, accidents do happen. Being in unfamiliar environments can cause distraction for any driver. PAI is designed to assist should you accidentally hurt someone, damage property, or are involved in an accident where it wasn't your fault at all, but the other party is uninsured. Some of the policies even have an added feature to include coverage for you when you're travelling via the courtesy coach, or a taxi following your immediate return of the vehicle, either to a hotel, or back to the airport.

LDW: Liability Damage Waiver. Sadly, it's a litigious world, particularly if you're in the US. The LDW is a policy to protect you up to certain limits, against any litigation arising within the period of your having the Hire vehicle. Excluded are illegal acts committed by yourself, or anyone acting upon your direction or encouragement.

PEC: Personal Effects Coverage. Unfortunately, Vehicles are occasionally broken into. This policy, sadly, is often misunderstood, and there have been many publicised events where the policy holder deliberately attempted to defraud the Hire Company's Insurers for personal gain. The policy does not include, in general, that new thousand Pound camera you purchased and accidentally left on your car seat overnight. Claims against PEC must include evidenced forced-entry, a comprehensive police report, and often supporting evidence from hotel/restaurant security cameras. Nor does the policy include the mysterious disappearance of cash. However, one benefit of purchasing a PEC policy is that it often provides coverage for your personal items inside your hotel room. Any claims made involve the submission of original receipts, matching credit card transactions, occasionally photo details, and a rather detailed vetting by the insurance company, including: credit/Equifax report, access of insurance records to determine whether there's a history of claiming, and police records check.

Virtually all of the above have unique exclusions. The damage and liability policy covers only the legal driver of the vehicle. A legal driver is the individual whose name is on the RA (Rental Agreement). It is illegal for anyone who is not specifically listed on the rental agreement to drive the vehicle, at any time, or for any reason. Failure to comply instantly invalidates all of the coverage you have, and is most likely extended to your private home-owners coverage as well, as you have committed a breach of the law, (a typical exclusion clause for any policy). Additionally, should alcohol be involved in any element, whatsoever, virtually all policies (vehicle and home) are invalidated.

Finally, a small secret: The credit card used to hire the vehicle must belong to the individual signing the rental agreement, and designated as the driver. Slots are provided for additional drivers, however, their driving license details must be provided at the signing of the RA. Failure to do so, again, invalidates virtually all of the coverage (both Rental and Home).

Provided you are fully aware of the coverage you have against the coverage you need, and you adhere to the laws and condition of the Rental Contract, you should be in good safety.