Before you walk up to the rental car counter, know whether you need to buy rental car insurance. The rental car company will try to sell you various types of supplemental coverage. That includes collision insurance that protects the rental car itself. It also includes liability insurance in the event you cause damage to another person’s property or injury to another person.
Neither of those policies will cover stolen or damaged personal property. If someone steals your laptop from the car, CDW/LDW or liability insurance won’t cover it.
To fill this gap, rental car companies sell high-cost coverage with limited benefits known as Personal Effects Coverage. But do you need it?
What is Personal Effects Coverage in a Rental Car?
Personal Effects Coverage typically costs about $2 per day. It usually provides $600 of insurance coverage per person, up to a $1,800 maximum, for theft of personal effects. But rental companies typically lump PEC with Personal Accident Insurance (PAI). This can bring the total extra cost to $5-11 per day, plus taxes and fees.
If you rent from a major rental company, the PEC option is similar because it is provided by third-party insurers:
- AvisBudget Group: Avis, Budget, Payless
- Enterprise Holdings: Alamo, Enterprise, National
- Hertz Global Holdings: Dollar, Hertz, Thrifty
This insurance may duplicate coverage. Your homeowner’s or tenant’s policy might already cover you, and it is likely to be primary coverage. This means that your own policy will typically pay out first. Then, when the policy limits have been reached, the PEC will kick in.
In addition, these policies tend to have exclusions and limitations. Typical exclusions include:
- Automobiles and their equipment, motorcycles, boats, motors or other conveyances or their appurtenances
- Household furniture, currency, coins, stamps, deeds, securities, bullion, tickets, or documents
- CB radios, radar detectors, GPS equipment, guns, merchandise for sale or fine art
- Contact lenses, artificial teeth and limbs
- Perishables or animals
PEC doesn’t cover “loss by mysterious disappearance.” That means PEC won’t help if items are stolen from a locked car without breaking and entering.
The Risk of Not Buying PEC When Renting a Car
What happens if you don’t have homeowner’s or tenant’s insurance and you decline the PEC? In a nutshell, if your personal effects get stolen or damaged, you have no recourse. That’s true even if the damage was caused by the rental car itself.
In a cautionary tale, Enterprise would not cover a renter’s personal valuables after their rental car caught on fire. The renters had purchased CDW/LDW but not PEC, so the insurance covered the burned car, but not the renters’ possessions. Alas, the vehicle did not have a known recall or defect, so there was no recourse.