Rental car insurance can be confusing, but it generally falls into a few main categories. Here’s a breakdown:

  1. Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This is not technically insurance but a waiver that covers damage to the rental car in case of an accident, theft, or vandalism. It often includes loss of use charges (the rental company’s loss of income while the car is being repaired).
  2. Liability Insurance: This covers you if you cause damage to other people’s property or injure someone in an accident while driving the rental car. In many places, rental companies are required to provide a minimum level of liability insurance.
  3. Personal Accident Insurance (PAI): This covers medical costs for you and your passengers in the event of an accident.
  4. Personal Effects Coverage (PEC): This covers your personal belongings if they are stolen from the rental car.

Options for Coverage

  1. Your Personal Auto Insurance: Check with your auto insurance provider to see if your policy extends to rental cars. Often, it will cover collision damage and liability.
  2. Credit Card Coverage: Many credit cards offer rental car insurance as a benefit if you use the card to pay for the rental. This usually includes collision damage but might not cover liability.
  3. Travel Insurance: Some travel insurance policies include rental car coverage.
  4. Rental Company Insurance: You can purchase coverage directly from the rental car company, which often includes all types of insurance mentioned above.


  • Check your existing policies: Before purchasing any additional coverage, check your personal auto insurance and credit card benefits to avoid overlapping coverage.
  • Consider your needs: If you’re traveling abroad, make sure your coverage applies internationally. Some countries require additional types of insurance.
  • Understand the terms: Read the fine print of any policy to understand exclusions and limitations.