It's important to understand the benefits and setbacks of rental car insurance.
If you’re renting a vehicle, you may be wondering, “does car insurance cover a rental car, or should I buy a short-term policy from the rental company?” Renting a car is fairly easy, but things get more complicated when you factor in your insurance needs.
It might seem like something you don’t really need to worry about, but knowing the insurance details of a rental car is critical. Does adding insurance to a rental raise the rental price? Does your regular car insurance cover your rental? Let us help you answer these and other important questions.
If you’re looking for cheap insurance coverage, enter your zip code below to get free quotes from the best auto insurance companies in your area.
In this article:
- Do You Need Rental Car Coverage?
- When Should You Consider Rental Car Coverage?
- What Does Rental Car Insurance Cover?
- Pros And Cons Of Rental Car Coverage
- Final Thoughts
- FAQ: Does Car Insurance Cover A Rental Car?
Do You Need Rental Car Coverage?
People often use rental cars for a short period — it could be for a few hours or even a few weeks. So, why spend money on insurance coverage for a car you’ll only use for a limited time?
Rental car insurance coverage is usually a good idea. But it’s true that if you don’t use it, coverage could seem like another redundant expense. Rental companies cover all vehicles with the state’s minimum coverage requirements, which usually includes liability car insurance. But this only covers other drivers’ cars if you’re at fault for an accident. You’ll have to pay to fix the rental car out of your own pocket.
This is why rental car companies offer additional collision and comprehensive coverage. Whether you need these rental car insurance policies depends on a few factors.
First, look at your current auto insurance policy. If you want to avoid high, unexpected rental costs, make sure your policy includes rental reimbursement within the coverage.
You may have rental reimbursement coverage included in your policy. This only covers your transportation costs if your regular personal vehicle is involved in an accident. The typical period that a vehicle is in a collision shop after an accident is between three weeks and a month. With rental reimbursement policy, the insurer will take care of your transportation expenses for your car's duration in the garage. However, this doesn’t cover vacation rentals. Make sure you look specifically for whether your personal insurance extends to rental vehicles.
The type of car you drive may also influence whether you choose to purchase rental car insurance. Want to park your usual, boring car for a day and live it up in a sleek luxury car, like a Mercedes G63 AMG? In this case, you might want to consult with the rental car company about extra insurance — nobody wants to be stuck with the tab if you run into some trouble living out your race car driver dreams.
When Should You Consider Rental Car Coverage?
You don’t want to get caught flat-footed at the rental car counter when barraged with the long list of questions one must answer before you’re out the door, keys in hand. Rental car businesses ask these questions to ensure the safety of their vehicles. Expect to answer questions such as:
- Do you have auto insurance?
- Will there be more than one driver?
- Does your trip include an off-road detour?
- Will you take additional coverage?
The last question is puzzling, especially if you had no idea rental cars also need coverage. As mentioned, specific auto insurance policies include additional coverage for rental cars. But if yours doesn't, then you should consider rental car coverage.
Although the car will come with liability insurance, you must either purchase extra collision coverage or sign a waiver that indicates you’ll be financially responsible for all repairs before rolling out the rental car company’s parking lot.
The good news is that many insurers offer short-term car rental insurance. This type of coverage is flexible. Insurers offer bespoke policies to fit all situations. However, the most common temporary car insurance policy runs from two to twenty-eight days.
What Does Rental Car Insurance Cover?
Though it is temporary, rental car insurance works like standard car insurance. There are a few types of coverage you can select, and most come with a deductible. Your deductible refers to how much you’ll pay out of pocket before your insurance coverage kicks in.
Depending on the rental car company you approach, you may be offered the following rental car insurance products:
Personal Accident Insurance
The liability protection provided by the rental company will only cover the property damage and medical bills of any other drivers if you cause a car accident. It does not cover you or your rental car. However, you can purchase personal accident insurance from your rental company to protect yourself.
This policy is optional because it could be a redundant cost if your health insurance policy is comprehensive. You may also be covered by your personal insurance company for these expenses, especially if you have personal injury protection (PIP) or medical payments (MedPay) coverage.
Loss Damage Waiver
You might have heard of collision damage waiver (CDW) or loss damage waiver (LDW). This is an add-on that waives the costs you incur in the event of theft or damage to the hired car. Some rental car companies charge customers for the time their vehicle spends in the garage as well. This is known as a loss of use penalty and is covered by a CDW.
Adding loss damage waiver protection to your rental car insurance policy may be expensive depending on the type of car you are renting and how you intend to use the car. For example, a CDW will cost more if you’re renting a car for an off-road trip.
Personal Effects Coverage
Personal effects insurance covers your valuables when using a rented car. It can be useful if you’re traveling and need to keep your luggage in your rental car for an amount of time, as the insurer will compensate you in case of damage or theft. Some insurers insist that policyholders name the valuables for protection. Others let you select a claim limit for the personal items in the car when the incident happens.
Pros And Cons Of Rental Car Coverage
If you’ve looked into whether your personal auto insurance will cover rental cars and your policy comes up short, here are a few pros and cons to consider when deciding whether to purchase extra rental car coverage:
|Rental Car Insurance Pros||Rental Car Insurance Cons|
It saves you the cost of repairing the rental car
out-of-pocket in case of damage.
It might be a redundant expense
if your personal car insurance covers rental vehicles.
If stolen, the coverage saves you the cost
of reimbursing the rental car company for the vehicle.
|Some rental car insurance policies are needlessly expensive.|
|It gives you added peace of mind on your trip.||
The coverage limits might not be adequate
to cover all parties in case of an accident.
You do not have to worry about replacing your valuables
if they’re stolen when using a rented car.
Policies can come with high deductibles, which you must
pay out of pocket before your coverage kicks in.
Most people might find rental car insurance a wasteful use of money, but this is not always the case. Even if you already have auto insurance, some policies do not cover cars that are not yours. The most important thing you should know is that all insurance policies have exceptions, and it’s important to understand what you’ll be on the hook for in the case of an accident.
If you travel often and are interested in getting a car insurance policy that includes coverage for rental cars, enter your zip code below to find cheap quotes in your area.