Rental cars are a convenient way for drivers to access a vehicle for short amounts of time. You may need a rental car when you’re out of town or while your own vehicle is in the shop.
If you’re planning on taking a rental car for your next trip, you might consider rental car insurance. This form of insurance can protect you against financial liability in a car accident or other unexpected incident. However, your own car insurance may cover your rental, so it’s important to understand if you even need to purchase this additional coverage.
Here’s what you need to know about car insurance and rental cars:
- What is rental car insurance?
- What are the types of rental car insurance?
- Do I need insurance to rent a car?
- Is rental car insurance expensive?
- Is rental car insurance worth it?
What is rental car insurance?
Rental car insurance protects the rental company if you’re in an accident or something else damages the rental car. It also helps protect you from financial liability if you cause damage to someone else’s vehicle or cause personal injury to another driver or passenger.
When you purchased insurance for your vehicle, you may have also purchased coverage for a rental car. Your insurance carrier may pay for your rental if your vehicle is involved in an accident or an unexpected incident leaves you without a functional vehicle (for example, if a tree falls on it). Not all insurance policies include this coverage, so you should check with your insurance provider to find out if you have it.
You can purchase rental car insurance through the rental company or add a rider to your auto insurance policy to cover rentals. Sometimes, you may want to consider additional coverage, even if your policy offers some protection.
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What are the types of rental car insurance?
You can choose from a few different types of rental car insurance coverages when purchasing insurance from a rental company. The option that best fits your needs depends on your situation:
- Personal effects coverage: This type of coverage protects you if someone breaks into your rental car and steals your personal belongings. If you have homeowners or renters insurance, your policy may already cover this — it’s important to check your policy to find out.
- Personal accident insurance: This insurance offers additional protection for medical expenses if you or a passenger are injured in a car accident. Check with your auto insurance and health insurance providers to find out if the additional coverage would be helpful for you, or if you already have adequate coverage.
- Liability insurance: This coverage protects you if you cause damage to another person’s car or cause injury to someone. Rental companies are required to provide the minimum amount of liability coverage that your state mandates. You may be able to utilize your own auto insurance to cover any additional expenses, but if you have lower liability coverage limits, you may need to purchase extra coverage.
- Loss Damage Waiver/Collision Damage Waiver: A Loss Damage Waiver isn’t actually car insurance. Instead, it relieves you of financial responsibility if someone steals or damages the rental car. The Loss Damage Waiver may also cover loss of use for the rental company (the period when the car can’t be rented because it’s in the shop) and administrative or towing fees.
Good to know: The rental company can void your Loss Damage Waiver if you’re involved in an accident because you were driving under the influence, speeding, or driving on unpaved roads. Check your own auto insurance policy to see if your comprehensive or collision coverage protects you against damages to a rental car.
Do I need insurance to rent a car?
You don’t need to have your own car insurance policy to rent a car. Most rental car companies will allow you to rent a car without proof of insurance. However, you generally must pay for some amount of insurance (typically liability coverage) through the car rental company. If you do have a car insurance policy, check if it offers rental car coverage. You may not need to purchase coverage from the rental company.
Your credit card may also include rental car insurance coverage. Contact your credit card company to find out if you have coverage, and if so, how much. While some credit cards may offer enough coverage, others may not. You may still want to buy additional coverage from the rental car company for peace of mind.
Finally, if you rent cars regularly, it can be costly to purchase insurance through the rental company each time. You may want to consider a non-owner insurance policy instead.
If you’re involved in a car accident and don’t have insurance, you could spend thousands on medical expenses and vehicle repairs. Additionally, if your car is stolen or your personal property is taken from the vehicle, you’ll be responsible for the financial losses. It’s always a good idea to have some form of car insurance coverage.
Is rental car insurance expensive?
The cost of rental car insurance will vary depending on your location, type of car you rent, and the rental company you choose. You can compare rates for rental cars online, and you can save money by booking in advance.
You can get a Loss Damage Waiver through car rental company Budget for as little as $9 a day, and Supplemental Liability Insurance for approximately $15 per day, as of December 2022.
Is rental car insurance worth it?
If you’re renting a car, you might wonder if purchasing car rental insurance is worth the extra expense. The truth is, it depends.
Pros of rental car insurance
When you purchase rental car insurance, you’re guaranteed at least some coverage in the event of an accident or unexpected incident, such as theft. If your auto policy doesn’t include a rental car rider and you don’t purchase rental insurance, you could end up with a massive bill if you damage the vehicle. Even if you’re a safe driver, predicting other people’s behavior is impossible. It’s not uncommon for rental cars to be stolen or broken into, and even simple damages, like hitting a pothole or bumping into another vehicle, could take a bite out of your budget.
Another potential benefit of buying rental car insurance is if you file a claim with the rental car company, you won’t face an increase in your personal car insurance premium. Plus, since many rental car insurance policies have no deductible (or a low one), you may pay less out of pocket than you would for a claim with your own auto insurance policy.
Cons of rental car insurance
While paying for rental car insurance does add an extra layer of protection, it’s not always necessary. The thought of paying for something you might not need is enough to give most drivers pause. One potential downside is if you already have adequate rental car coverage through your existing car insurance or your credit card, you’ll spend money you could’ve saved.
Rental car insurance policies are similar to traditional policies, so you can expect similar coverage based on your state’s minimum requirements. If you’re renting a car outside of the United States, you may not be able to rely on your policy to cover your rental, so make sure you talk to your insurance agent before your trip.
The bottom line
Rental car insurance is an excellent way to enjoy peace of mind and an added layer of protection before your next rental car trip. It’s essential to consider all your options and talk to your insurance agent or credit card company to ensure you’re covered if the unthinkable happens.
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Disclaimer: All insurance-related services are offered through Young Alfred.
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