Certain forms of coverage are required while renting a vehicle. But your own auto insurance policy or a credit card could be able to provide you with some coverage.
Here’s how to determine when purchasing insurance is worthwhile.
POINTS TO NOTE
In the event of an accident, theft, or damage to the rental car, rental car insurance can help shield you from out-of-pocket costs, but the daily price will raise the cost of your rental.
It’s possible that your own auto insurance policy already offers sufficient protection when you rent a car, so you might not need supplementary rental car insurance.
If you use a certain credit card to cover the entire rental price, some cards come with benefits for car insurance.
Understanding the coverage you already have and what is covered (and what isn’t) if you add further protections will help you determine whether you need automobile rental insurance.
What Does Rental Car Insurance Cover?
When you hire a car, you’ll probably be presented with the choice of additional coverage at the counter. Depending on the state you’re renting in, these coverage categories may vary, but they commonly include:
Loss Damage Waiver (also known as Collision Damage Waiver)
If you are in an accident or the automobile is damaged or vandalized while you are renting it, a collision damage waiver or loss damage waiver (CDW or LDW) will pay for any necessary vehicle repairs for an additional daily price. It might also include the theft of the rented car.
The expense is only partially covered by a partial CDW, and you could have to pay a deductible.
Personal Effects Coverage
Theft or damage to your luggage or other personal belongings while they are in your rental car will be covered by this optional coverage for you and the individuals you are traveling with.
Personal Accident Insurance
If you or your passengers are hurt while driving your rental car, this insurance will cover your medical bills, including ambulance transport and hospital care. In the event of an accident-related death, it might possibly offer benefits.
Additional Liability Defense
In the event that you cause injury to another person or damage to their property in an accident, supplemental liability insurance (SLI) raises the liability coverage cash amount. Additionally, it might pay for harm caused by underinsured and uninsured drivers.
SLI, for instance, might provide coverage of up to $1 million. Additionally, if you have your own motor insurance policy, it can pay the difference between the $1 million in damages you cause to others and the coverage provided by your policy.
Roadside Emergency Service
This service covers any towing or taxi fees brought on by broken or lost keys, as well as any lost or damaged keys.
Emergency Sickness Protection
Only travelers from outside the United States are covered under this insurance, which includes coverage for ambulances, dental and medical office visits, medical and surgical procedures, and more. There can be a list of notable exclusions.
Tip: The majority of credit card and rental car insurance policies have extensive lists of limitations and prohibited conduct that restrict coverage. For instance, your CDW might not provide coverage if you get hurt or killed while driving while intoxicated, if you have a pre-existing ailment, or if you rent a car to travel to the doctor. Before leaving, make sure you are familiar with the terms of your insurance coverage for the rental car.
Do Rental Cars Fall Under My Insurance?
Driving a rented automobile may be covered by the following insurance policies, if you have them:
- Auto liability insurance, Up to your limits, covers injuries you cause to third parties.
- Covers damage to the rented vehicle under auto collision and comprehensive insurance.
- Homeowner’s insurance protects your possessions in case they are stolen or damaged.
- Medical insurance Pays for accident-related injuries.
- Life insurance Offers benefits in the event of your accidental death.
Your auto insurance might even cover damage to a rental car if you’re in an accident, even if you don’t have collision coverage, depending on your home state or the state where you rent the car.
However, you are sometimes only covered up to your policy limits and must pay your deductible in full in order to cover damages and injuries. The amount of time you can rent a car and still be covered by some personal auto insurance policies may be limited.
Your insurance might not cover expenses like loss of use, which is lost income resulting from your inability to rent a car while it’s being repaired, that the rental car company might charge you. Administrative costs and other fees might not be covered by your insurer.
Call your insurance provider if you have any questions about how your coverage operates.
Insurance for a rental car using a credit card
You can get free rental car insurance if you pay for the full rental using a specific credit card. This insurance only covers damage to a rental car; it does not cover liability. Look at the benefits summary on your credit card to find out what kind of coverage you have.
- Primary rental car insurance: Your credit card company will act as your primary insurance provider for rental car damage, saving you the trouble of having to submit a claim to your auto insurance carrier. Keep in mind that you will still need to file a claim if you caused someone else’s injuries or vehicle damage in an accident.
- Secondary rental car insurance: This insurance can be added to your personal auto insurance policy and will pay for your deductible and additional expenses for rental car damage that go above your insurance’s coverage limitations. In some circumstances, such as when renting a car internationally or when you don’t have a primary auto insurance policy, secondary insurance takes the place of primary insurance.
Some credit cards may provide coverage for your luggage and other valuables in addition to accidental death and injury insurance. For details on coverage guidelines and exclusions, carefully read the card’s policy.
Travel Insurance for Car Rentals (Third Parties)
You might get insurance from a third party that covers personal property protection, medical expenses, and automobile rental insurance, depending on your itinerary and destination. If auto insurance policies and credit card insurance benefits don’t offer the necessary specialized coverages, for instance, this could be useful when traveling abroad.
Driving Abroad: Special Considerations
It’s a good idea to chat with your agent to see whether you require additional insurance to cover you when driving a rental automobile abroad. For instance, if you travel to another nation, it’s likely that your personal insurance won’t cover automobile rentals.
In case any more accidents or injuries occur while you are traveling abroad, you can look for a third-party policy.
How Much Does Car Rental Insurance Cost?
If you choose to add CDW/LDW and other coverages, you can anticipate paying an additional $30 to $50 per day, on average.
For an economy-sized automobile in June 2023, we gathered prices from three rental car companies in three cities (Orlando, Florida; Las Vegas; and Boston). We calculated the typical insurance premiums for car rentals. The outcomes, rounded to the nearest dollar, are listed below.
How Do Rental Car Insurance and Rental Car Reimbursement Coverage Differ?
Insurance for rental cars pays for expenses related to vehicle damage from theft, vandalism, or accidents. On the other hand, personal auto coverage for your car that includes reimbursement for rental cars is an alternative. If you need to rent a car while your automobile is being fixed, it will cost up to a certain sum per day.
If I Rent a Car Abroad, Do I Need Rental Car Insurance?
Find out if and how you are covered for a car accident when traveling abroad, including any injuries, damage, or injury to other people. For more information, contact your credit card company, health insurance provider, and personal auto insurance provider.
You can choose whether rental car company coverage or third-party travel insurance will best fit your needs if you don’t have enough coverage (or any coverage at all).
Does My Credit Card Provide Insurance for a Rental Car?
A lot of credit cards provide secondary rental car insurance for physical damage, which in some circumstances can become primary. To learn more about your coverage, call your card. Although there aren’t many credit cards that provide rental car insurance, if you have travel rewards cards, check to see whether it’s a featured perk.
Secondary physical damage coverage for a rental car could be offered by your American Express card.
But for a charge per rental, you can add primary rental car coverage (known as American Express Premium Car Rental Protection), which rides on your card and offers more benefits than standard primary coverage. But before you rent a car, you have to register.
Does Temporary Car Insurance Protect Rental Cars?
In the United States, short-term auto insurance contracts that last less than six months are rare. Other nations, like the United Kingdom, where you can buy an insurance term for as little as one hour and as long as 30 days, may have greater availability of these policies.
Additionally, short-term travel insurance plans with certain damage coverage are available in the United States.
Don’t approach the rental counter unsure of whether the rental company’s insurance is worthwhile. The coverages you currently have determine whether you require rental car insurance.
Examine your credit card’s or insurance company’s coverage in light of the specifics of your car rental. Before picking up your rental automobile, it is best to call your auto insurance agent and/or credit card provider to find out whether and how you are insured.