Is It Necessary To Buy Rental Car Insurance?

Rental car insurance comes handy when you’re off on a road trip on a rental car, and the last thing you want to worry about is bearing expenses in an unfortunate incident.

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Most people don’t own cars for daily commuting because mass transit options are cheaper and more convenient for them in terms of parking and not having to drive. But when they want to go on a week’s road trip, they have an option to rent cars.

This is extremely convenient for people to simply opt for rental cars if they’re looking for a safe way of transport on their own terms. But what happens if you meet with an accident? Since the car is not your own, you will have to pay for all the damages you’ve caused to your own car along with liability on another car.

This is why buying rental car insurance is an excellent idea.

Rental Car Insurance

A rental car insurance, also known as non-owner car insurance is when a licensed driver rents a car and the policy covers damages. Imagine if you’re driving a rented car and you meet an accident on the road; you damage someone else’s vehicle or their property. And maybe some injuries that you cause them. If you accumulate all of this, you’re in for paying a very heavy sum.

But if you have non-owner car insurance, your insurance company will typically cover liability charges and bodily injuries of the other person so that you don’t have to pay a single penny out of your own pocket.

Just like regular auto insurance works- where the insurance company covers the cost and charges of the owner’s car, a non-owner insurance policy covers liability charges associated with the rental car.

What does it cover?

  • Liability: Any damage that you cause to someone else’s vehicle or property. The expense will be covered under non-owner car insurance policy.
  • Medical: Any bodily injury you cause to others.
  • Legal: Any legal lawsuit or expense if you’re sued for causing the accident.

What does it NOT cover?

  • Collision and Comprehensive: Damage caused to the car you’re driving will not be covered under non-owner car insurance.
  • Bodily injuries: Any medical expenses that YOU suffer because of bodily injuries will not be covered.
  • Other drivers: Non-owner policies only cover YOU, not any other drivers in the house like your children or spouse.
  • Loss of personal belongings: If your valuable assets are stolen or damaged while in the car, they won’t be covered under this type of insurance.

Rental Car Insurance Coverage

The coverage type depends on the type you need and how much additional cost it will add in your policy.

Coverage Type Benefits Cost
Basic Liability Coverage Pays for bodily and/or property damage to others that you’re responsible for, up to a basic amount (usually the legal minimum for the state you’re renting in

 

 

Included in the cost of the rental Collision Damage Waiver (CDW)/Loss Damage Waiver (LDW)

 

$9 to $19/day

Supplemental Liability Coverage (SLC) Increases your liability coverage up to $1 million $7 to $15/day
Personal Accident Insurance (PAI) Provides medical and accidental death benefits if you or your passengers are injured or killed in an accident $1 to $7/day
Personal Effects Coverage Reimburses you for any personal property that is stolen from a rental vehicle $1 to $5/day

Note: Sample data has been extracted online, courtesy of ValuePenguin.

Is it necessary to buy Rental Car Insurance?

If you’ve ever spent time negotiating on the car-rental counter, you will realize how much the company convinces you to purchase the Collision Damage Waiver (CDW).

What is it and why do companies push you into buying it?

A CDW is basically a waiver voucher which ensures that in case of theft or serious damage to the vehicle, the insurance company won’t come after you. Bodily injury isn’t usually covered under CDW.

So if the insurance company basically waives off all the amount that you may have owed, why do they push you so much into buying? What’s in store for them?

Well, the waiver isn’t as inexpensive. You are expected to pay somewhere between $10-30 PER DAY! That’s right. So if you’re going on a two-week trip by renting a car, you pay so much more in total than even the whole cost of the trip.

You may pay $10 to $30 a day for a loss damage waiver alone. If you opt for supplemental liability, add another $10 or so. This is how much a dollar rental car insurance cost per day is.

This is why they make you think it is necessary to buy rental car insurance to protect you from the risk of destroying a rented car. And though expensive, it may definitely be necessary to protect you from an unfortunate incident on the road that brings so many expenses.

Why you should buy Rental Car Insurance

If you’re going on a trip with your friends or family, the last thing you need to worry about is a road accident. Of course, no matter how much of a careful driver you are, there is always a possibility that you could be sweeped into an unfortunate incident.

And that would mean paying hundreds of dollars on a car that you don’t even own.

This is why rental car insurance is necessary and why you should buy one before going on a road trip. Yes, the policy may be expensive, but would surely benefit you in case of an unfortunate incident. And the money could keep adding on if there is any bodily injury or liability that you’re asked to cover.

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Buy Rental Car Insurance Online

If you’re looking to buy rental insurance, you can do so by buying rental insurance online through your credit card. According to ValuePenguin, here is what is there to know about coverages given through credit cards.

  Visa American Express Mastercard
Credit Cards All All Gold, Platinum, World and World Elite Cards
Limits $50,000 $50,000/$75,000 $50,000
Period 15/31 days 30 days 15 days
Deadline to submit claim 90 days 180 days 180 days
Contact info (800) 847-2911 (800) 338-1670 (domestic)

(216) 617-2500 (worldwide)

(800) 622-7747

Does my Credit Card cover Rental Car Insurance?

Credit cards ordinarily just give crash harm inclusion, so you won’t be considered answerable for any burglary or harm to the rental vehicle.

When you get your rental vehicle, you’ll have to choose whether you need to pay for the rental organization’s collision damage waiver (CDW). The waiver gets the obligation from you if any harms may cause while in your ownership. If your credit card gives free CDW security as a piece of its prizes, you can set aside some cash and try not to need to pay for the insurance you as of now have.

With the improved version of Bank of America’s rewards program, you can receive a cashback of 3% on these categories: gas, online shopping, dining, travel, drug stores and home improvement/furnishings.

Bonus rewards: The Preferred Rewards Program by the Bank of America gives users a benefit of 25% to 75%- for gold members it is 25%, for platinum it is 50% and for platinum honors it is a cashback reward of up to 75%. The cards that qualify for this bonus are:

  • Bank of America Cash Rewards credit card
  • Bank of America Travel Rewards credit card
  • Bank of America Premium Rewards credit card
  • Most Bank of America branded consumer credit cards qualify as long as the account is open and in good standing.

Rental insurance: If a person is driving a rental car, all credit cards by the Bank of America offer collision and theft, meaning any loss or damage caused by collision will be compensated by reimbursing the amount. Moreover, Bank of America offers a roadside dispatch program in case you’re driving your car or a rental car and you need assistance. The program can provide emergency assistance, towing and locksmith services, but you have to pay for the cost of the service provided.

Third Party Rental Car Insurance

Third party rental car insurance covers other cars and other people’s bodily injuries in case of an accident. In the event of an accident, for example, it can cover damage done to the other car involved, the passengers inside it, or to other people’s property.

Here’s a list of things third party insurance can cover:

  • The cost of repairing any damage done to third party property (e.g.: a fence)
  • The cost of repairing any damage done to the other car involved in the accident
  • The cost of third party injury (e.g.: medical bills and costs in general)
  • The cost of legal fees

Who has the best Car Insurance?

The best car insurance is decided with how much coverage they provide policyholders and in the best rates.

Minimum vs. full coverage average annual rates by company

Company Full coverage Minimum coverage Annual difference
Geico $1,198 $478 $720
State Farm $1,511 $624 $887
Progressive $1,766 $774 $992
Liberty Mutual $1,778 $900 $878
Allstate $1,834 $784 $1,050
Farmers $1,865 $926 $939

When do you pay Rental Car Insurance?

Even though it may be necessary legally to pay for rental insurance, it is also important that you note in what circumstances it might actually be a good idea to have a rental insurance policy.

If your already existing insurance policy has minimum liability coverage and you feel that it will cost you more in case you’re met with an accident, then rental insurance is your best bet.

If you don’t want to risk paying a high amount of deductible, then also it may make sense for you.

If your current policy has only insured you under commercial auto insurance policy, they won’t cover you in an accident with your personal or rental car. In such a case you will need to opt for rental car insurance.

It is important to get rental coverage on your car insurance so that the weeklong trip you’re planning with your family is covered by your insurance company. Just read the existing policy agreement properly and ask all your questions before getting on the road.

Conclusion

If you’ve made a deal with the rental company that you’re coming to pick up the vehicle, you will have to prove to them that you’re already covered for rental insurance. Or, that your personal insurance also extends to rental.

In case you forget that certificate at home, you will have to ask your insurance company to fax the certificate to the rental agency as solid proof that you’re insured.

If in case your personal auto insurance doesn’t cover rental insurance, they will ask you to sign a CDW with them, and will probably force you into doing so- like we’ve discussed above.

Rental car insurance gives you the peace of mind that you’re not going to have to pay for a car that you don’t even own if you meet with an accident on the road. Sometimes even the slightest scratch on a rental car could cost you a lot of money to get it repairs.

In some countries, it is absolutely necessary for you to have rental insurance if you’re renting a car because insurance companies require it from you. But even if it wasn’t necessary, it is definitely a good idea to get one.

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Tony Bennett

Tony Bennett

Tony Benett makes his living in the insurance industry by teaching and consulting. He is also recognized by the legal profession as an expert on insurance coverages. His insurance experience includes having worked at the company level, owned an independent general agency and having worked for an insurance association. He has received various certificates over the past few years and helps his clients and readers by giving them a realistic outlook on what they can expect to achieve within their set targets. At Insurance Noon, he is known for his in-depth analysis and attention to details with accuracy. He has been published as one of the most referred agents by his peers in the insurance community. Tony loves the outdoors and most sport events. His passion other than providing excellent advice is playing golf.

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