No, car rental insurance is a major component of the cost to rent a car in the US. Since you should always be insured when driving a car, knowing what the different car rental companies charge for insurance is as important as shopping for a good car rental deal itself.

We did a little research to show what companies are charging for liability damage waiver (DW), personal accident insurance (PAI) and supplemental liability coverage (SLP). For more details on what these terms mean, see our last article.

We contacted car rental stores in Los Angeles, San Francisco, Boston, Chicago and Miami. We chose Enterprise, Hertz and Avis for their size in the US market.

Overall, we found that the prices vary greatly by city. This depends highly on state laws and levels of risks by city. Generally, we found that Los Angeles had the cheapest insurance packages, with prices varying from $24 to $28 per day. Then follow San Francisco and Miami. The most expensive prices are in Boston, where car rental insurance ranges $39-46 per day!

Car rental companies take turns on who has the cheapest insurance. It depends on the city. In Los Angeles, Enterprise is the cheapest. In San Francisco, Hertz wins. Avis was not the cheapest in any city we researched, but has pretty competitive prices overall.

Take away: in order to research for the best car rental deals, you must take into account the prices of car rental insurance, if you need one. There is no point choosing a store because they advertise a $19/day rental if you later need to pay $45 for the insurance.

Here is the raw data:

Note: prices as of December 2009.

Source: primary research.

So you have chosen the car you want to rent, but you’re confused with all those terms and acronyms in the car rental insurance coverage?

Our car rental specialists at Spagg.com have prepared a guide to walk you through the various types of car rental insurance. Here are the main elements:

• LDW, DW or Liability Damage Waiver: this equals collision coverage on a personally owned policy. This part of the insurance/waiver is your protection from paying for losses on the car you rented if you damage it or if you’re victim of theft.

• PAI or Personal Accident Insurance: this is similar to the medical pay coverage on a personally owned policy. Pays medical coverage for injuries for passengers and drivers inside the vehicle.

• SLP or Supplemental Liability Coverage: equals liability in personally owned policy. Covers third party property and medical costs if you are at fault in an accident.

The most expensive parts of the insurance are the LDW and SLP. Car rental insurance packages typically range $23-$45 these days, depending on the city and state fault laws.

Other hints:

• Always check the deductibles you will need to pay in case of losses. They can change prices and can give you an extra headache in case anything happens.

• Don’t forget to check with your personal auto insurance if they already cover your car rentals. Car insurance packages can be almost as expensive as the car rental itself, so this can save you a lot of money.

• Credit card insurance: don’t assume your credit card insurance protects you before reading the fine print on their contract. They generally only cover the LDW part, and they have various restrictions on when they can be used.