Rental car companies usually offer car insurance as an upsell for people who come to them to rent a car. They call these CDW or Collision damage waivers. Legally speaking you are required to have insurance in case you get into an accident. Given that, you might as well get the insurance the rental car company offers.
What If I Don’t Own a Car?
Another benefit of CDWs is that they have limited coverage periods. They can be as little as daily or weekly. This way you don’t have to pay for long-term insurance if you only need it for a few days while you are driving your rent a car.
What to Do if the Rented Car Gets Damaged?
This is the reason why you want to get a CDW. Trust me you don’t want to end up footing the bill for car repairs in case of an accident. Repairs can be expensive and a severe drain on your budget.
Therefore getting rented car insurance will help you and the other party in the accident whole again. Whole again means that they will pay for the cost of repairs or at least a reasonable amount of the repair costs.
Some insurers require a participation amount. Think of this as like a deductible but for car insurance. It is not perfect, but at least you won’t have to pay the full price of costly car repairs.
Should You Get “Extra” Coverage?
Since the insurer might require a certain level of participation and only covers damage to the vehicles you might think that maybe you might want to get more insurance or maybe get medical insurance in case someone gets hurt during the accident.
This is a good idea for people who do not have personal auto insurance because the CDW will only cover damage to cars for short periods. Just so you don’t forget, if you rent cars regularly perhaps you can consider getting personal auto insurance.
Does it Matter Where You Get Insurance?
As a general rule, it matters where you obtained the insurance because it is only valid for a state or the country where you got it.
If you’d rather not worry about that, you can get umbrella insurance policies that will follow you even if you go to a different country. These can be a little more expensive, but at least your one policy is going to be valid even if you travel.