Car Insurance: Don’t be Surprised by Loss of Use

There is something about a car rental you may or may not know.

Last summer when we were arranging for a car rental for our summer vacation/business trip, I called our insurance company to see if we were covered under our personal automobile insurance. Sure, no problem. But, there was a hitch. There’s an item called “loss of use.” Another term for this is Loss Damage Waiver (LDW). This means, if we were in a car wreck, whether our fault or not, we would be responsible for paying the rental company for the amount of time the car was in the repair shop and not on the road being rented out. This could cost up to $50 a day or more. Car repairs, even simple ones, can take days. Our insurance company didn’t cover this. And since we couldn’t buy only loss of use insurance from this particular car rental company, we ended up buying the full car insurance for “peace of mind.” Another option for obtaining LDW coverage is by checking with your credit card company. If you use your credit card to rent the car, it may come with LDW included in the insurance, particularly if it’s a higher end credit card.

Negotiating the rules of insurance coverage are only part of the quagmire called “renting a car.” To be as clear as possible about insurance coverage, ask your insurance company about your own policy and then check with the car rental company. Getting clear before you sign on the dotted line might save you a bundle if you are in a fender bender, or at least you won’t be surprised when the bill comes.

Here is a link to the Trip Insurance store. You can buy loss of use insurance. I have no idea if it’s any good, but it might be worth checking out. To help you make a decision, here’s a guide that explains aspects of insurance coverage in more detail.