Some drivers find that having rental car insurance is essential. Others consider it to be a wasteful expense. But how do you figure out which group you belong to?
Review your personal auto insurance policy’s coverage before renting a vehicle. The insurance may occasionally cover a rented car you carry for your vehicle. In other words, purchasing rental auto insurance may be redundant with other coverage you currently have.
But in some circumstances, the additional expense of the rental company’s insurance might make sense. Because of this, it’s critical to comprehend what the rental company provides and what your auto insurance covers.
Do You Need Rental Auto Insurance?
You generally don’t need it if you already have coverage for a personal vehicle. Rental businesses automatically cover the minimum required by law in your state if you don’t already have a vehicle with insurance. However, you might need to acquire rental auto insurance if you want extra security, are traveling internationally, or are doing so for business.
Is My Car Insurance Valid For Rental Cars?
A personal auto insurance policy includes liability protection and any extra protection you’ve chosen, such as comprehensive or collision. You might cover your rental car if you use it for private purposes. Your policy’s coverage limits and deductibles apply to your rental automobile use.
Liability coverage
Helps cover the cost of another person’s medical costs or property damage if you cause a collision in your car (or your rental vehicle).
Complete protection
Helps cover the cost of repairs if your car (or a rented car) is damaged by one of the insured perils, like theft, wind, fire, or natural catastrophes. Your comprehensive coverage’s deductible will be applied.
Collision protection
Helps cover the cost of fixing your automobile (or a rental car) if it sustains damage caused by hitting another vehicle or object, like a tree or fence. The deductible for your collision insurance will be used.
Is Rental Car Coverage Included With My Credit Card?
According to the Insurance Information Institute, some credit cards give extra insurance on top of your coverage if you use that certain credit card to pay for a rental car. If your credit card company offers additional rental auto insurance, call the toll-free number on the back of the card and ask them to explain your alternatives before making your car reservation.
For instance, you might elect not to acquire that coverage from the automobile rental company if your credit card offers collision coverage for rental cars. The insurance offered by the card issuer is sometimes “secondary,” according to the III. This indicates that it might pay for your deductible and any extra expenses above what your main insurance provider will pay for.
The following categories of rental cars may not be covered by some credit card companies, according to Forbes:
- Luxury automobiles
- Motorhomes
- Trucks
- Motorcycles
Before renting, make sure to check your benefits.
Is It Worthwhile to Purchase Rental Car Insurance?
Rental automobile insurance can be costly. Purchasing a comprehensive coverage plan can nearly double your rental fees. You also don’t need insurance because the state’s minimum requirements automatically cover rental automobiles. However, in some cases, it may be worthwhile.
Consider renting a car in California without insurance as an illustration. The California minimum car insurance requirement does not cover any damages to your rental car. However, it does cover up to $5,000 in property destruction to other vehicles if you cause an accident.
No state needs any amount of collision or comprehensive insurance to cover your own vehicle’s repair costs. If you only have the bare minimum of coverage in your state, it may be a good idea to purchase it. This is especially important given that you will most likely be driving an unfamiliar car in an unfamiliar region.
Should I purchase insurance for a rental car?
Inattentiveness, poor judgment, poor handling, and aggressive driving are more frequently associated with rental cars than non-rental cars, according to a Journal of Advanced Transportation study. Even if you have a fantastic driving record on your daily commute, driving in unfamiliar circumstances might be nerve-wracking.
So, is it advisable to purchase it? It depends on whether you want to know that you’ll be protected in the worst case. Just choose the collision damage or loss damage waiver provided by the rental business if you want coverage and don’t yet have full coverage insurance.
When Is Insurance Coverage From A Rental Car Company A Good Idea?
You must purchase liability coverage from the rental provider before you leave if you don’t already have insurance. This is because most states mandate liability insurance for all motorists.
You are uninsured or have a bare coverage
Getting a rental auto insurance policy is frequently necessary if you don’t have main motor insurance or your coverage is minimal. Without a rental business policy in this situation, you run a significant danger of financial ruin.
You travel for business
Your personal insurance plan could not provide coverage if you frequently travel for business. You could be better off getting your rental auto insurance if your employer doesn’t provide it.
You want to protect your auto insurance
If you claim on your personal auto insurance that covers a rented car, be prepared to pay more. Such a scenario is avoided by having separate car rental insurance.
You are driving internationally
If you take your rental car outside of the United States, your auto insurance won’t cover it. Although your credit card might provide some coverage, it is unlikely to be available in most of the world’s top tourist locations, including Australia, Italy, and Ireland.
Rental Car Insurance vs. Personal Auto Insurance
The following are the common insurance options offered by rental car companies, along with instructions on checking to see if your existing auto insurance policy already covers this.
Crashes and car theft
At the counter
LDW or CDW releases you from liability if the rental car is damaged or stolen. Technically, it’s a waiver stating that the rental car business won’t pursue you rather than insurance.
Your policy
Your collision & comprehensive coverage from your policy will frequently apply if you hire a car within the United States or Canada. Your deductible will still be your responsibility. And also claiming your auto insurance coverage can increase your premium.
Unless you purchase the LDW, you would be responsible for the damage if your normal insurance doesn’t cover collision and comprehensive coverage or if you rent in a place where this coverage is not applicable.
The damage you do to others
At the counter
Additional liability insurance will cover any damage you cause to people’s cars or property. The usual upper limits are between $300,000 and $1 million. You should get this if you don’t have car insurance or go somewhere where your insurance won’t cover you.
policy
When you travel within the United States and Canada with a rental car, your liability insurance will normally protect you. You could get additional insurance to increase your coverage if your auto policy only provides little liability coverage.
Injuries
At the counter
If you are in an accident, personal accident insurance will pay the medical bills for you and your passengers. This covers benefits for an ambulance, medical care, and death.
Your policy
Suppose you rent in Canada or the US. You likely don’t need personal accident insurance if your car policy includes medical negligence or basic health insurance coverage. If you remain in the United States, your health insurance might also cover you. You probably won’t need personal accident insurance while traveling if you have travel medical insurance.
Your stolen stuff
At the counter
Your goods are covered by personal effects coverage if they are removed from the rental car up to a set value limit.
Your policy
A homeowners or renters insurance policy will typically cover your goods if they are stolen, even when traveling abroad. You will often need to submit a police report and your threshold amount to lodge a theft claim. Like vehicle insurance, making a property claim could increase your rates.
What Are Your Rental Car Insurance Options?
According to the III, rental car companies often categorize their supplemental rental auto insurance products into four categories:
- Liability coverage
- Waiver of ollision/loss damage
- Coverage for personal effects
- Personal accident insurance
Liability coverage
Liability coverage protects you if you hurt or damage somebody else’s property while driving. You might not need to acquire additional rental car liability insurance from the company if you have sufficient coverage under your existing auto insurance policy. Your insurance agent can assist you in reviewing your policy and determining the appropriate liability limit for you.
Waiver of collision/loss damage
A collision/loss damage waiver (often referred to as an LDW or CDW) is not insurance. If you damage the rental automobile, this waiver may assist in covering the expense of repairs. Usually, the waiver excludes damage brought on by speeding or using dirt roads.
A collision damage waiver can duplicate your current coverage if your car already has collision and comprehensive insurance. However, suppose you have eliminated collision or full coverage from your policy and do not purchase the waiver. In that case, you will most likely be responsible for any damage to the rental car.
Furthermore, a rental firm may charge you for the “loss of use” of the car while it is being repaired. Typically, your auto insurer will not compensate you for this. Read your automobile rental agreement carefully to understand what charges you can face if you damage the vehicle.
Coverage for personal effects
Suppose your things, such as your laptop or clothing, are taken from the rental car. In that case, personal effects coverage may assist cover them. Your items will typically be covered by your property insurance, or “off-premises coverage,” if you have renters or homeowners insurance.
Off-premise objects are often protected only up to a specified proportion of your property coverage. Your homeowner’s or renters insurance deductible will apply. Check with your provider about the coverage limits.
Personal accident insurance
Suppose you are injured in a rental car accident. In that case, personal accident insurance can assist pay your medical bills and those of your passengers. According to the III, if your car insurance policy includes health insurance, medical payments, health coverage, or personal injury protection, you may even have coverage similar to what the rental business provides.
Medical payments, insurance, and personal injury protection may assist in paying medical bills incurred due to a covered car accident.
Credit card benefits
Some credit cards offer more comprehensive rental car coverage. You might rely on the rental auto insurance offered by one of your credit cards. Read the fine print because every credit card is different. Sometimes, credit card coverage is constrained and eliminated in many places.
Review the exclusions, booking requirements, and coverage levels. Typically, you must pay for the rental car with your credit card. Otherwise, it offers no advantages for renting a car. While many credit cards protect rental cars, their travel insurance coverage is generally inadequate. Most don’t even have one.
Unfortunately, several credit cards ambiguously characterize their travel benefits, leaving you in the dark about what you have. Suppose you suffer an accident and need to pay for medical care, for instance. In that case, travel accident insurance may sound like travel insurance.
Instead, accidental death and dismemberment insurance is what travel accident insurance is. Disparate coverage justifications are confusing. Fortunately, several credit cards offer excellent coverage for renting a car. Before relying on them, be aware of their restrictions and circumstances.
Medical insurance
Rental car companies do not provide medical coverage if you get hurt while driving. Consider purchasing supplemental Travel Medical Insurance if you’re renting a car domestically and your medical insurance has higher copays and deductibles outside your home state.
Of course, suppose you’re renting a car abroad. In that case, it’s unlikely that your health insurance will cover the full cost of your medical bills if you have a serious accident. If necessary, flying home in a medical jet won’t be financially advantageous.
When traveling abroad, we usually advise people to carry at least $100,000 in medical insurance and $250,000 in medical evacuation coverage. This level guarantees you obtain the best healthcare possible outside of the US.
Checking Coverage Before Renting A Car
Verify if you already have insurance from sources like your credit card company, health insurance policy, renters’ or homeowners’ policy before renting a car. Check the details of your auto insurance as well. It might not be cost-effective to get additional insurance if your auto policy already covers the necessary amounts.
Frequently Asked Questions
Do I require insurance for a rental car?
Your existing coverage determines it under other insurance policies. Check your auto insurance coverage, credit card benefits, and homeowners’ or renters’ insurance policy before you travel. They may provide you with rather extensive rental car coverage when combined.
Is it possible to rent a car without insurance?
Even if your policies do not take effect, your rented car already has some level of insurance. However, you are liable for any damage you cause to the vehicle, so be sure you have coverage.
How do I submit a rental auto insurance claim?
Suppose you are in an accident or suffer any other form of damage. In that case, you must notify the rental car agency and your insurance company. Check your rental contract for instructions, and you should be able to find an urgent phone number somewhere within the car easily.
What kind of car rental insurance should I get?
This is determined by the type of coverage you now have. Before acquiring a separate policy, check to verify what is covered under your current car insurance. Then, investigate whether your credit card company, homeowners, or renters insurance can fill in the gaps.
Is my car insurance valid for rental cars?
Your liability coverage will apply to any car rentals, but only up to your policy’s limit. You will likely be protected in additional instances if you have comprehensive collision coverage.
What does the rental insurance plan cover?
Before you choose a plan, you should determine what it includes first! Collision damage insurance may cover the cost of replacement or repair if your rental car is lost, stolen, or damaged. Liability insurance can shield you against claims of physical harm or property damage by other cars.
Personal accident insurance may cover your passengers’ medical, ambulance, and death benefits. Additionally, personal effects coverage may cover the theft of items from a rental car. Although rental car companies may pressure you to purchase all of these insurance policies, liability and collision damage insurance, or CDI, is the most crucial form of coverage.
Can I get rental auto insurance with a suspended license?
Most insurance providers won’t offer or keep insurance for someone whose license is suspended or revoked. Even when your license is suspended, options are still available if you need to go from home to work.
You can either negotiate a hardship license with your local DMV or have your insurance agent document an SR-22 form only with DMV on your behalf. You can acquire auto insurance if you are permitted to drive due to a hardship license or an SR-22 form.
Is car insurance required?
Minimum insurance coverage is required for cars in 47 states before you can drive them. These states have penalties for driving without insurance, including license suspension or revocation, fines, and jail time.
Liability insurance, which covers injuries and damages you might cause, is the minimum necessary coverage in most states. However, some also call for additional coverage like collision and comprehensive.
Are some items not covered by the rental insurance?
Yes. Rental businesses typically do not provide insurance for tires, extras, dents, damaged suspension from potholes or curbs, rims, windshield cracks, and scratches. Additionally, flooding or any other type of force majeure is not covered if the key to the vehicle or its paperwork is lost or damaged. Each rental company may have a different set of requirements. Before you accept the rental contract and pick up your vehicle, double-check all insurance needs.
How does car rental insurance work?
Damage cover, theft cover, and third-party protection are the three fundamental forms of insurance that every rental car must carry to operate on the road. This isn’t true everywhere; Chile and Mexico are the only countries that don’t require damage and theft insurance.
All three will be charged when you book a rental car in Europe. You might be able to use the damage and theft protection offered by your credit card if you don’t reside in Europe. This type of protection is not exactly insurance. It is a waiver. Thus the business renounces its right to demand payment for the damage.
Why is car insurance important?
There is a chance of an accident that could cause harm to you and your car, whether you’re driving or parking outside your property. Car insurance acts as a safety net in case of mistakes made by drivers or unplanned events.
Any harm or destruction you do to another person while operating a vehicle is your responsibility as the driver. You are liable for your injuries and damages if an uninsured driver causes an accident. These expenses can add up, and the less rental car insurance coverage you have, the more out-of-pocket expenses you will incur.
Conclusion
We just went through a few rental car insurance choices, for example, personal accident insurance, liability coverage, and coverage for personal effects. Each has advantages and disadvantages. Consider all of your alternatives and learn about any benefits that you may currently have in place.
The simplest? Purchase it from the car rental business. The majority of us would just purchase a Loss Damage Waiver. If you go this route, understand your financial obligations before committing to a rental car.
