For a lot of folks, when they rent a car in the US for the first time, the biggest headache is not driving but all those insurance offers at the rental desk. All the different types can really mess with your head, like all those letters - CDW, SLD, PAI and such. They seem a bit pricey, but you also worry that if something goes wrong and you have no cover, you will get a huge bill. The truth is, car rental insurance in the US is not that hard. You just need to focus on two main things - covering the car and covering the people - and think about your credit card, your own car insurance or travel insurance. Then you can make a good choice.

Why do you gotta take insurance seriously when renting a car in the US?

Laws are different in each state. Sometimes the minimum liability insurance is only between $10,000 and $25,000. That will not cover much in the US where medical costs are crazy high. Fixing a car, towing it and paying for work are all very expensive. A small scratch could cost over a thousand dollars. If someone gets hurt in a crash, the payout could be hundreds of thousands or even a million dollars. Think about one customer in California who accidentally scraped a car door when backing up. The fix cost $2,300, and he also had to pay for the other person's rental car. It was good he bought CDW (Collision Damage Waiver), or he would have paid himself. So, it is really needed to buy insurance when you rent a car. It protects the car and also gives you cover for other people.

Common insurance options from car rental companies:

When you rent a car in the US, rental companies offer many insurance types. First is CDW/LDW. It is not normal insurance, it is more like a deal. If the car gets damaged or stolen while you have it, the rental company will not ask you for money. It costs a bit, usually between $15 and $30 a day, but it saves you trouble and you do not pay for the damage.

Next is SLI. It gives you cover for other people. If you accidentally hit someone or break their things, SLI will pay for it. In the US, the minimum liability insurance limits are very different by state. Some states have very low limits, but the SLI from rental companies usually makes it up to $1,000,000, which really lowers your risk. Then there is PAI (Personal Accident Insurance). It pays for doctor visits or accidental death for the driver and people in the car. If you already have world medical insurance or travel insurance, you often do not need this.

Last, there is PEC. It mainly pays for things lost from inside the car. If you already have home insurance or travel insurance, you do not need this one.

Check if your travel insurance already covers SLI:

Most travel insurance plans now include SLI. They often cover the driver too. Many people do not know their travel insurance gives this protection. So, you do not need to buy more SLI. You must check your travel insurance papers before you rent a car. See if SLI is included. This stops you from buying it twice.

Insurance coverage changes by rental company and place:

Some rental companies put CDW, LDW and SLI in the rental cost, but that is not common, mostly when you book from different countries or areas. Like for people booking from the UK, some insurance might be included already.

Can you use coverage you have instead of rental car insurance?

Many people already have credit cards, their own car insurance or travel insurance. These might cover rental car insurance, so you do not need to buy more when you rent a car. Many top credit cards, like Chase Sapphire Preferred, American Express Platinum and Citi Prestige, give CDW insurance, but you must pay for the rental with that card. But these credit cards might not work for rentals in the US, or they only give "secondary coverage", which means they only pay after your own car insurance pays.^[1]

Also, if you already have your own car insurance in the US, it usually covers rental cars, mostly for crash and liability insurance. But you must check if your plan clearly says "rental car coverage". If you have world travel insurance, it might cover rental cars too, but look hard at the rules in the plan to be sure you are not limited to some countries or cases.

Recommended insurance plans for different groups:

The best insurance plans are not the same for different rental car groups. If you are a tourist and have no US car insurance, you should at least buy CDW/LDW and SLI. If you have no overseas medical insurance, you can buy PAI. If you often carry costly things, you can buy PEC. For people living in the US, first check if your car insurance covers rental cars. If it does, you can skip the rental company's insurance. If you are not sure, it is safer to add CDW to avoid hurting your own car insurance record. For people watching their money, the insurance at the rental desk costs more but is easier to get. Buying early on another website saves money, but you must keep your plan safe so you can pay first if there is an accident and then get your money back.

Common wrong ideas:

When renting a car, many people get some things wrong. Many folks think US law makes you buy full insurance. Actually, the law only asks for minimum liability insurance, and the limit is often low and does not cover most accident costs. Second, some people think their credit card will cover all rental car insurance. But the truth is, some credit cards only cover car damage, not other people. Some people worry that if they pick low-limit insurance, they will have to pay hundreds of thousands if something happens. In fact, if you buy SLI, it usually covers most cases, so you do not need to worry too much. Last, many people are scared to say no to the sales talk at the desk. But you can just say in a nice way "No, thanks, my credit card already covers CDW".

Tip: You might still pay more money even with insurance

Even if the car already has basic crash and loss insurance, the driver might still have to pay extra. These are often high deductibles and other added costs. The amount could be hundreds of dollars, so when you rent a car, check the deductible and possible added fees well to avoid extra money stress.

To avoid trouble when renting a car, take photos or videos of the car before you take it to show its condition and avoid being charged for past damage. Also, do not leave valuable things in the car, mostly in tourist cities like San Francisco and Los Angeles where car break-ins are common. If there is an accident, call the police and the rental company right away and keep all your papers and insurance plans for later claims.

Source:

[1]https://www.nerdwallet.com/credit-cards/learn/credit-card-rental-car-coverage-what-it-doesnt-include

Reference:

[1] https://www.icarhireinsurance.com/information-and-news/news/what-insurance-you-need-when-hiring-a-car-in-the-usa

[2] https://www.progressive.com/answers/rental-car-insurance/

[3] https://www.vroomvroomvroom.com/rental-information/insurance/