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Rental car insurance provides coverage when driving a rental car and is obtained through personal policy, car rental companies or credit card benefits.
Auto Insurance Coverage For Rental Cars
Written by: Daniel Robinson, Written by: Daniel Robinson Writer Daniel is an editor on the Guides team and has written for numerous automotive news sites and marketing companies in the US, UK and Australia, specializing in automotive topics. car financing and maintenance. Daniel is a Guides team authority on auto insurance, loans, warranty options, auto services and more.
When To Say Yes To Rental Car Insurance
Edited by: Rashawn Mitchner, Edited by: Rashawn Mitchner Editor in Chief Rashawn Mitchner is a Guides staff editor with over 10 years of experience in the personal finance and insurance fields.
The Guides team has reviewed the best car insurance companies on the market, and a comprehensive coverage plan from one of our top-rated providers can provide solid coverage for rental cars.
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Know Your Rental Car Insurance Coverage
The Guides team is committed to providing reliable information to help you make the best decision possible regarding your vehicle insurance. Because consumers trust us to provide them with objective and accurate information, we have created a comprehensive rating system to formulate our ranking of the best auto insurance companies. We collect data on dozens of auto insurance providers to rate companies based on a wide range of ranking factors. After 800 hours of research, the end result was an overall score for each provider, with the insurers with the most points at the top of the list.
If you already have car insurance for a personal vehicle, you probably don’t need rental car insurance. If you don’t already have an insured car, rental companies automatically cover the bare minimum in your state. However, if you want more protection, or if you are traveling internationally or for business purposes, you may need to purchase rental car insurance.
Yes, you can use your own car insurance for a rental car as long as your trip is personal. Your personal coverage limits and deductibles will apply. If the trip is for business, your personal auto insurance policy may not cover any type of damage or injury unless you have commercial coverage. However, your company may have a commercial auto insurance policy that can cover the vehicle.
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If you have liability and comprehensive insurance for your personal vehicle, coverage will likely extend to cases where you drive a rental vehicle in the United States. For this reason, your existing auto insurance policy is likely to adequately cover the cars you rent in the country.
That said, there are other variations of rental car insurance for those who need them, which we discuss in more detail in the sections below.
There are four main rental car insurance options that your rental agency can offer you: loss and damage insurance (LDW), liability coverage, personal accident insurance, and personal effects coverage.
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Below are the different types of car rental insurance. Check your car rental contract to see exactly what is covered.
Car rental companies also sell liability insurance. This covers property damage and injuries to other drivers as a result of an accident you cause. If you have liability insurance, your own policy will provide this coverage (as long as the trip is not business). But if you know you’ll be traveling around Miami alongside Lamborghinis and Ferraris, $10,000 of liability coverage probably won’t be enough, so you may want to increase your policy limits.
If you travel frequently but don’t own a car, you can also purchase non-owner auto insurance that covers you in all driving situations.
Insure Your Rental Car For Less
This option exempts you from any responsibility in case of total loss, accidental damage, environmental damage, theft and vandalism. Collision Damage Waiver (CDW) is similar, but does not protect against theft. These waivers essentially act as comprehensive and collision policies for rentals. If you already have comprehensive and collision insurance, you probably don’t need it.
However, loss and damage insurance will not require you to pay a deductible, which is another thing to consider.
If you cause damage to your vehicle and it is sent to the repair shop, the car rental company may charge you a fee for each day the car is out of service. Loss and damage insurance will protect you from these costs, as will most full coverage insurance policies. However, some won’t, so it’s a good idea to review your own policy before renting a car.
Credit Card Rental Car Coverage
This type of coverage covers the medical expenses of you and your passengers, regardless of who was at fault for the accident. It’s similar to the medical payments (MedPay) and personal injury protection (PIP) you would get in your standard vehicle.
If you already have one of these insurance policies, you do not need personal accident insurance. Additionally, if your personal auto insurance does not cover your medical expenses, your health insurance may cover them after you pay your medical deductible. Personal accident insurance does not require a deductible.
This additional coverage option protects your personal items such as electronics, luggage, and clothing. If you have a homeowners or renters insurance policy, it will also cover personal items stolen from a rental car.
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In addition to the options offered by the car rental company, you may be covered by your credit card company or travel insurance plan.
Premium credit cards typically include primary coverage for rental cars. Primary coverage has high limits and can handle the entire claim, meaning your own insurance company won’t find out about the claim (and won’t raise your rates).
On the other hand, standard cards usually include secondary coverage. This comes with lower limits and requires you to first file a claim with your own insurance company. In both cases, you must book the rental with the credit card to benefit from the coverage.
Driving A Rental Car Overseas
Travel insurance programs can typically cover collisions and loss of use at a cheaper rate than the car rental company.
If you are traveling to Mexico or Canada, your personal insurance may or may not cover rental cars in those places. It’s a good idea to talk to your agent to find out before you travel. Typically, standard auto insurance companies in the United States do not cover foreign rentals. Therefore, in this situation it may be advisable to take out rental car insurance.
Rental car insurance costs vary depending on the vehicle and location. But in a word, it is expensive. Generally, prices range from $31 to $60 per day for rental insurance from these providers.
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In many cases, it would be cheaper to increase your own insurance limits for a year than to purchase rental car insurance for a two-week vacation.
To put these prices in perspective, even if you have a comprehensive insurance policy with high limits, you’re probably paying much less than $60 per day (or $1,800 per month) for your personal auto insurance.
Rental car insurance can be expensive – you can easily double your rental costs if you purchase a comprehensive coverage package. Technically, you don’t need to purchase insurance either, as rental cars are automatically covered based on your state’s minimum requirements. However, it can still be worth it in certain situations.
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For example, let’s say you don’t have insurance and you rent a car in California. The minimum auto insurance required in California covers up to $5,000 in property damage to other vehicles if you cause an accident, but it does not cover any damage to your rental vehicle.
In fact, no state requires any level of collision or comprehensive insurance coverage that applies to your own vehicle repair bills. It may be a good idea to purchase rental car insurance if you simply have the minimum coverage in your state. This is especially true when you consider that you will likely be driving an unfamiliar vehicle in an unfamiliar area.
So, is it worth taking out rental car insurance? It depends if you want to have peace of mind that you will be covered in the worst case scenario. If you want coverage, opt for the rental agency’s collision or loss insurance if you don’t already have comprehensive coverage insurance.
Does Car Insurance Cover Rental Cars?
A study published in the Journal of Advanced Transportation found that inattention, poor driving, poor handling, and aggressive driving are more associated with rental cars than non-rental cars. You may be a great driver on your regular trips, but driving in a new situation can be stressful.
In this review we talk about rental car insurance and whether it is worth purchasing. Below are some of our picks for companies that can help you with car rental insurance.
Ultimately, it is cheaper to get a comprehensive car insurance policy from a trusted provider than it is to pay regularly for rental car insurance. Many industry-leading providers, such as Travelers and USAA, offer coverage that can be applied to rental vehicles while you travel.
Rental Car Coverage And Travel Insurance
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