Does My Car Insurance Cover Rental Cars?

Hiring a car and confused about buying rental car insurance? The article will answer all your queries related to insurance when renting cars.

If you rent a car, do you need car rental insurance? Contact a car rental company, and it will inform you that you do. But ask an insurance specialist, and the answer gets demoted to a “maybe.”

Usually, a personal auto insurance policy goes to rental cars with the same coverage limits. But verify with your insurance agent to confirm the coverage you’ll have for a rental.

When you rent a car, you’re accepting responsibility for a costly vehicle. For instance, a Ford Fusion, one of the full-size cars in Enterprise’s fleet, will set you back $23,170. The GMC Yukon in Hertz’s fleet costs $50,600.

Car rental companies have fleet insurance for their vehicles, but it doesn’t cover the cars and trucks when they’re rented. And when you rent a car, you sign an agreement accepting a charge for the vehicle. That means, whatever happens, is all on you—or your insurance.

If you’re not covered, and you total the car, a rental company will give you a bill for $23,170 for the Fusion. Or $50,600 for the Yukon.

The article will answer questions like whether your car insurance covers rental cars, whether you need extra insurance when renting cars, and more.

Does My Car Insurance Cover Rental Cars?

There are some auto or home policies that already protects you when it comes to renting a car. These include the following.

Liability: Since almost every state requires liability insurance, your personal auto policy already shields you against any harm or injury you trigger while driving a rental car, up to the limits of your policy.

Loss-damage waiver: If your rental car is stolen, vandalized, or damaged in an accident, a loss-damage waiver implies you won’t be held accountable by the rental car company. This can also be called a collision damage waiver by some rental car companies. While the waiver is relatively cheap, you’re already covered for physical harm to your rental car if you have comprehensive and collision on your auto policy. Comprehensive covers damage from events that are not in your control: theft, fire, vandalism, weather-related issues, and hitting an animal. Collision defends against damage from mishaps involving another vehicle or object.

Personal accident insurance: Personal accident coverage guards against wounds to you and your passengers while driving a rental car. Though, if you already have medical payments coverage or personal injury protection (PIP) on your auto policy, you’re possibly covered for medical bills ensuing from an auto accident concerning the rental car. Your health insurance coverage may also decide whether personal accident coverage is required.

Personal effects coverage: Normally low-cost and available from most rental car companies, personal effects coverage covers personal items stolen from a rental car. Nevertheless, your belongings are already covered under your personal property insurance on your homeowners, condo, or renters policy — even while traveling away from home in a rental car.

Advantages of Using Your Own Insurance for Car Rental

  • Using your insurance is much less costly than rental insurance: If your auto insurance policy covers rental cars, using your current policy will be cheaper than purchasing additional insurance for the rental. You can relish the peace-of-mind of driving with the correct insurance without paying more for it.
  • You are well aware of your auto insurance provider and its reputation: If you use your insurance, you have a connection with the provider and you realize how dependable it is. If you choose rental insurance, you may be working with a new organization you are not familiar with.
  • Less paperwork needed during the rental: When you’re at the rental counter, you typically want to get in and out as soon as possible. Completing rental car insurance forms takes additional time and effort. This part of the rental procedure can be avoided if you already have an insurance policy that covers rentals.

Drawbacks of Using Your Own Insurance for Car Rental

  • Car insurance won’t cover loss of use charges: If you harm a rental car and it’s in the repair shop, your car rental company may be held you liable and charge a daily “loss of use” fee. The problem that can come up is that personal auto insurance policies don’t cover the loss of income that a rental car company may try to charge you while the car is being repaired. If a repair costs $10,000 but takes 18 days, they can attempt and charge you for the income they lost on those 18 days, and insurance companies will not pay back for those charges
  • Car insurance probably won’t work outside the U.S.: The coverage on your auto policy is not likely to operate outside the country for a rental car. Rental coverage normally only pertains when you’re renting in the U.S. Note that some countries, like Ireland and Jamaica, need that you buy car rental insurance. If that’s the case, the insurance costs should be incorporated into the price of your rental vehicle.
  • Consequences of a claim: if you file an insurance claim from your own policy, specialists warn of a few other problems. You’ll have to pay the deductible if you’re making a collision or comprehensive insurance claim. After that, there’s a possibility your car insurance rates will go higher. That’s why a lot of travelers have a preference to lean on their credit card coverage when they file a claim—so the claim remains off their insurance record. Another method to maintain your insurance record clean is to purchase the rental agency’s collision damage waiver (known as the CDW).

Buying the Rental Car Agency’s Insurance

Even if you feel you’re covered, you might still want to get car rental insurance through your travel insurance policy or right through the rental company, experts recommend.

The truth is that the majority of vehicle owners have little to no idea what exclusions their auto insurance contracts contain. You might not be aware that your policy excludes coverage when you rent a vehicle. That’s why it’s crucial to double-check with your agent.

On the other hand, consumers often grumble about the cost of car rental insurance. That’s a distinct topic, but definitely one worth considering. Car rental companies prepare their frontline agents to sell insurance, which is highly profitable for the rental company but can simply double the cost of your rental. They’re also mindful of the pervasive confusion about what auto insurance does—and doesn’t—cover. For them, it’s the ideal condition under which to sell optional car rental insurance.

No matter what you choose to do, contemplate about auto rental insurance prior to travel so you don’t get ripped off at the rental car counter.

If you don’t, you could end up paying extra on costly optional car rental insurance—and possibly buying coverage that you already have.

How much does Rental Car Insurance Cost?

Rental car insurance costs change by company and coverage, but it isn’t economical. You may pay $10 to $30 a day for a loss damage waiver alone. If you choose supplemental liability, add another $10 or so. Personal accident insurance and personal effects coverage could lead to another $5 each to your tab.

Sum everything together, and you could simply pay as much as $30 a day to be completely covered by rental car insurance. Thinking that you can often rent an economy car for not much more than that—and sometimes less, if you get a decent deal—that kind of daily tab for rental car insurance is a hard pill to absorb.

How do I Know if My Insurance Covers a Rental Car?

Prior to signing any paperwork at the rental office, call your auto insurance agent and inquire

if your car insurance covers your rental car. If you don’t have liability, comprehensive, and collision coverage on your own car, then your insurance likely will not cover your rental car if you get into an accident or damage the rented vehicle.

Another crucial thing to bear in mind when thinking about whether or not your auto insurance

covers your car rental is the aim of the trip. If your personal auto insurance doesn’t cover business use, you may not be covered by your policy if you rent a car for a business trip.

Always check again your personal auto insurance policy to make it certain that you have enough coverage before acknowledging or declining insurance at the rental office.

Credit Cards and Rental Insurance Coverage

In supplement to coverage from your auto insurance policy, your credit card company might offer insurance coverage if you make use of its card to pay for the rental. Though, it’s essential to verify with the company prior to renting to know exactly what kind of coverage you may or may not have. In some instances, it might only be collision insurance, which can assist pay for any property damage but not cover any expenses arising from wounds that occurred in the collision.

Additionally, be mindful that different credit card companies have different rules and limitations

when it comes to what they cover. Some models such as sports cars or exotic vehicles are often not included, and what’s covered can change from one credit card provider to the next. Some don’t cover incidents that occur on dirt or gravel roads, while other cards don’t cover damage to wheels and rims.

Understanding whether your auto insurance covers your rental car isn’t an easy yes-or-no

answer. Because there are many different factors to take into account, always speak to your auto insurance agent before going on a trip. Reassess your policy and decide what you might need.

Do You Need Extra Insurance When Renting A Car?

While rental car coverage regularly coincides with your existing home or auto insurance, there are a few cases where adding rental car insurance could be advantageous:

  • Deductibles may not apply with rental car insurance: If you have a high deductible on your personal auto policy, you could pay a much smaller amount or nothing out of pocket on a rental car insurance claim.
  • Escape claims against your personal car insurance: If you have a claim, you can file it against the rental car insurance, which can prevent a potential rate increase to your personal policy.
  • You have no coverage on your personal auto policy: If you don’t have comprehensive or collision coverage on your personal auto policy, adding up the loss-damage waiver can safeguard you against harm to your rental car.
  • You can momentarily increase your coverage limits: You may only hold the state minimum for liability coverage on your personal auto policy or maybe you aren’t holding sufficient coverage for your own peace of mind while driving a rental car. Adding additional liability from the rental company entails greater security if you’re at-fault in a mishap.

Though we wouldn’t advise buying rental car insurance when you’re already covered, there are some common circumstances where you might need extra insurance when renting a car.  Here are a few:

  • You don’t have car insurance: If you don’t have car insurance, you have very high deductibles, or you don’t have comprehensive and collision, you’ll maybe want to contemplate about at least choosing for the rental company’s loss damage waiver. If you have no car insurance at all, you’ll also require to spring for additional liability.
  • You’re traveling for business: If you’re mixing business and pleasure and your company won’t cover rental car insurance, speak to your own car insurance agent about whether your policy will safeguard you. If you’re renting a car mainly for business, your personal car insurance may not cover you at all.
  • You’re driving a rental car abroad: Prospects are your car insurance won’t cover you most places outside the U.S. While your credit card may still offer some protection, make sure the country where you’re traveling isn’t explicitly omitted from benefits. You’ll frequently be out of luck in many popular destinations, including Italy, Ireland, and Australia.
  • You’re concerned about a rental car incident affecting your personal insurance rates: If you file a claim, your rates could rise The same is valid if your claim includes a rental car, but in this situation, you don’t need to fret if you purchase the rental car insurance.
  • You want the serenity of a mind at any cost: For some, the information that you don’t need to be concerned about may be sufficient to sign on the dotted line for rental car insurance irrespective of the coverage they may already have. If fretting about your rental car will otherwise cast a cloud over your trip, by all means, get rental car insurance coverage.

Rental car companies provide additional insurance at an additional cost to customers renting vehicles. This rental car insurance coverage gives peace of mind for renters but is totally optional. Evaluating your insurance policies or credit card benefits is urged before renting the vehicle; in many instances, you may have sufficient coverage and will not require to purchase the extra insurance. Nevertheless, there are circumstances where the additional insurance may be useful, such as during foreign travel or due to insufficient coverage on your personal auto policy. In any situation, while accidents are mostly unforeseen, you will know that by buying the car rental insurance coverage, losses to the vehicle will be the least of your worries, letting you travel with confidence, knowing everything is covered.

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.

Leave a Reply

Insurance Noon is the world's leading source of insurance related content on the web, focusing on industry news, buying guides, reviews, and much more.