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Do I Need Rental Car Insurance?
Whether you need insurance coverage on a rental car is an individual choice, of course, but in general, you’ll need to know what might be covered and where to find it before you make a decision.
There are a host of options when you are trying to decide whether to get car rental insurance, and if so, from where. Coverage of accidents and ensuing medical expenses involving a rental might be through:
- Existing medical insurance policy
- Auto insurance policy
- Existing homeowners or renters insurance policy
- Travel insurance policy
- Credit card benefits
- Rental car company
We go into each option below, walking you through what they might offer.
Is it necessary to buy rental car insurance?
Insurance on your rental car isn’t typically required by law. However, you’ll need to research what you already have available and what you might want to add.
Rental car companies might offer insurance via a loss damage waiver or collision damage waiver (LDW or CDW). This type of insurance may cover you if your rental car is damaged in a collision, stolen or vandalized. With this waiver, the car rental company may not pursue you for repairs and losses.
However, this kind of rental car insurance is often, though not always, redundant if you have certain coverages on your regular insurance policies. Following the steps below can help you determine whether you’re already covered.
Does my auto insurance cover rental car incidents?
You may already be covered under your existing auto insurance policy if there’s an incident when driving a rental. Review your personal car insurance policy coverage types and limits to see if it includes any sort of loss damage waiver or collision damage waiver for rental cars. However, your existing auto insurance may not cover all incidents.
Pros of using your own insurance for car rental
- You know your auto insurance provider and its reputation: If you use your existing insurance, you have a relationship with the provider and you understand how reliable it is. If you opt-in for rental insurance, you may be working with a new organization you know nothing about.
- Less paperwork required at the time of renting: When you’re at the rental counter, you usually want to get in and out as soon as possible. Completing rental car insurance forms takes extra time and effort. This part of the rental process can be bypassed if you already have an insurance policy that covers rentals.
Cons of using your own insurance for car rental
- Personal auto insurance may not provide what you want: Your insurance may not provide the coverage you want or your agent recommends if there’s a qualifying event with the rental car.
- You’re planning to travel overseas: Many auto insurance policies are limited to the United States. If you are traveling abroad, your auto insurance may not cover rental car claims that occur outside of the country.
How can I get insured when renting a car?
In some cases, your other insurance policies and credit cards offer benefits that can be helpful if you experience a qualifying event with your rental vehicle.
Check your health insurance policy
Your health insurance policy might pay the medical costs for you and your passengers if you’re hurt in a rental car crash.
If this is not something your health insurance policy will cover, personal accident insurance might cover medical costs for you and your passengers if you’re hurt in a rental car crash.
Check your homeowners insurance or renters insurance policy
Your homeowners insurance or renters insurance policy might cover your belongings wherever you take them, even if they’re stolen from a rental car.
Note the limits of your personal coverage, which may require extra riders for certain valuables such as expensive jewelry.
Check your travel insurance
If you’ve purchased travel insurance for your trip, see whether car rental collision coverage is included. This kind of coverage might be similar to what the rental company’s loss damage waiver would take care of, sometimes at a lower cost.
Check whether the coverage is primary or secondary, however. Primary means this insurance kicks in first. Secondary means this insurance kicks in after other insurance is reviewed and possibly pays out.
Check your credit card benefits
Some level of rental car insurance is a benefit offered by many credit card companies as long as you pay for the rental with your card.
Specific car rental insurance benefits will vary by company and card. You may be covered for a certain period of time. The amount of collision damage will usually be capped at different amounts.
Theft and towing costs are commonly covered, but personal property and medical benefits are less common. Some companies will cover loss of use charges. It’s common for card companies to exclude certain vehicles, such as expensive luxury cars and costs incurred in certain countries. Most credit card benefits provide only secondary rental car insurance coverage. You’ll also usually have to decline the rental car company’s coverage to take advantage of these benefits.
How much does rental car insurance cost?
Rental car insurance costs vary by company and coverage. You may pay $10 to $30 a day for a loss damage waiver alone. If you opt for supplemental liability, you may add another $10. Personal accident insurance and personal effects coverage could add another $5 each.
What does the rental car insurance offered at the counter cover?
Car rental agencies have their own process for selling insurance when renting cars, so there is no list of coverages that will apply across the board. However, most rental agencies will have coverages you can purchase along with your rental.
Here is a list of coverages commonly offered by rental agencies, according to the Insurance Information Institute. The coverages might be either sold separately or packaged under a single rental insurance policy:
- Loss/collision damage waiver: The loss damage waiver, or LDW, is sometimes called the collision damage waiver, or CDW. The LDW might cover if your rental car is stolen, vandalized or damaged in a crash. This may include loss of use charges, which rental car companies charge to make up for lost profits when they must repair a vehicle.
- Liability: Sometimes called supplemental liability insurance, or SLI, this rental car liability insurance might cover if you are at fault while driving the rental car. It might also pay medical expenses for others who are hurt in a crash in which you are at fault.
- Personal accident insurance: Personal accident insurance, or PAI, might cover medical costs for you and your passengers if you’re hurt in a rental car crash.
- Personal effects coverage: Personal effects coverage, or PEC, might cover you if any personal items are stolen from or damaged in your rental car.
Some drivers may choose to buy extra coverage from the rental agency even if they have some protection under their insurance policy.
Standalone policies for rental cars
If you do not carry rental car insurance as a benefit on your other insurance policies or credit cards and you want to skip the policy offered at the rental desk, you might be able to purchase a standalone policy.
If you rent cars often and want a standalone policy, here are a few of your coverage provider options.
- Allianz: The company offers a policy called Rental Car Damage Protector that might provide coverage with 24-hour emergency assistance. This policy includes possible coverage for lost or damaged baggage, a collision damage waiver to possibly cover your rental car if it’s stolen or damaged in an accident or if it’s parked.
- Insure My Rental Car: Insure My Rental Car offers annual and daily rental insurance policies with collision damage and loss damage waiver. This provider does not insure in some East Coast states.
- Bonzah: Bonzah offers comprehensive damage waivers to cover qualified damage from a crash, theft or vandalism. It also might cover damages caused by bad weather such as windstorm, fire, hail or flooding.
- Sure: Sure offers rental car insurance coverage in the qualified event of an accident or theft as well as possible protection against lost keys, flat tires and damage from driving with the wrong fuel. It might also pay towing expenses.
When should you get rental car insurance?
There are situations when people sometimes consider rental car insurance.
- You don’t have car insurance, or what you have is bare-bones.
- You’re traveling for business.
- You’re driving a rental car abroad.
- You’re worried about a rental car incident affecting your personal insurance rates.
- You want peace of mind at any cost.
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