Is your rental car covered?

LDW, SLI, PAI, PEC. Just what is this alphabet soup of "protection plans" that you're confronted with when you rent a car? Basically, it's a list of insurance options, most of which you're not required to take and may not need.

If you own a car that's fully insured, that coverage probably extends to other vehicles you drive occasionally, says Robert Hunter, director of insurance for the Consumer Federation of America. Even if you've dropped collision and comprehensive insurance, Hunter notes, many major credit cards provide this coverage if the card is used to pay for the rental.

But don't leave home without checking what your auto and homeowners policies and your credit card, cover. Paula Stifter, public affairs manager for Hertz, says that customers often show up at a car-rental desk with no clear idea of what insurance protection they have, "so it's nearly impossible for the rental agent to assist them." Take a look, too, at whether your insurance protection follows you into other countries, or if it stops at the US border.

Here's a look at the protection packages typically offered by rental agencies—at a cost that can add substantially to your daily charges—and some tips on when to consider buying them. The contents of the package vary, depending on the agency and location, but most contain:

• Loss-damage waiver (LDW) or collision-damage waiver (CDW), which relieves you of financial responsibility if your rental car is damaged or stolen. Take it if your own auto insurance policy covers only an older car, and your credit card doesn't take up the slack.

• Supplementary liability insurance (SLI) increases the liability minimums that most car-rental agreements include to as much as $1 million. You can safely waive this if your own auto insurance policy provides adequate third-party liability coverage.

• Personal-accident insurance (PAI) provides medical and death benefits, and a nominal extra charge gets you personal-effects coverage (PEC), which offers some reimbursement if property kept in the car is damaged or stolen. Your medical and homeowners insurance probably make both of these unnecessary.

— Staff Editor Vicki F. Brentnall

Where to get additional information

Vicki Brentnall. Is your rental car covered?.

Medical Economics

Apr. 25, 2003;80:51.