If you rent a car and it is damaged by accident or otherwise, you could be on the hook for the first portion of the damage, which is known as the deductible. This could range from a few hundred dollars up to the total price of the vehicle.
The best way to protect yourself against this risk is to buy Collision Damage Waiver (CDW). This is also called LDW or Loss Damage Waiver. The advantage of this type of insurance is that the renter of the vehicle is relieved of responsibility got the dollar value of the damage or loss to the car, all the way to the full price of the car. It is important to know that if you violate the terms of the car rental agreement, then this coverage does not take effect. An example of this would be if someone else drives the rental car and you did not list them as a driver when you rented the car.
Your credit card issuer may give you LDW/CDW insurance as part of your standard card benefits. Check your card agreement or call your company to find out if this is the case. This coverage, if it is offered, typically will provide coverage supplemental to your regular car insurance. Thus, if your rental car is damaged, your personal insurance will pay for the costs of repair up to the policy maximum. This is then followed by the coverage offered by your credit card issuer kicking in to pay the remainder of the damage costs. Keep in mind that this could impact the rates you pay for your insurance if your insurance company hits you with an accident surcharge on future premiums.
Another type of optional insurance is PAI or Personal Accident Insurance. This insurance gives medical coverage and accidental death coverage for the renter of the car and additional passengers that are riding in the rental car with you. You should check your own car insurance to check if car rentals are covered. If they are covered, it is possible that you do not need to buy PAI.
PEC or personal Effects Coverage gives you coverage for the theft or loss of your personal items from the car you rent.