Should I get rental car insurance?

There are many reasons you might rent a car. You may be sightseeing in a new city and need your own set of wheels to get around, or your car might be in the shop for a tune-up. Whatever the reason you’re renting, you need to make sure you have the right rental auto insurance in case an accident occurs. 

However, the answer to “should I get rental car insurance?” depends on a few factors, like your existing auto insurance coverage and whether you have insurance benefits through your credit card or even homeowner’s insurance. To find out whether you need rental car insurance, this guide will go over everything you need to know about rental car insurance so you stay protected and cost-effective. 

Before you read one, get quotes for auto insurance that includes rental car coverage right now. Enter your ZIP code above for fast, free quotes.

What does rental car insurance cover?

Rental car insurance policies cover many of the same things as personal auto insurance. However, they often use different terms for the same types of policy coverages. This confusion can lead you to purchase extra coverage that you might not need “just to be safe.” Let’s demystify some of these confusing terms.

Some of the common coverage types that rental car insurance offers are:

• Collision Damage Waiver (CDW)
• Liability Insurance
• Personal Accidents Insurance
• Personal Effects Coverage

Collision Damage Waiver

This will cover you if you cause damage to your rental car or it is stolen. Depending on the policy, certain car parts (like windshields or tires) or types of rental car damage (like weather) may not be covered.

Note that some companies call this a loss damage waiver (LDW).

Liability Insurance

Liability insurance covers the cost of damage you may cause to other vehicles, people, or property as the result of an accident. 

In many, but not all, states, your rental fee includes the state minimum liability insurance. However, the state minimum may be very low. If you choose to decline coverage in one of these states, do your research and make sure that the state minimum car insurance coverage is something you’re comfortable with.

Personal Accident Insurance

This car insurance policy covers the medical costs of anyone, including you, injured due to an accident in your rental car.

Personal Effects Coverage

Personal effects coverage will refund the cost of any personal items you lose if your rental car is stolen. However, some policies explicitly exclude or place limits on certain items, so be sure that the valuables you want to be protected are covered.

Some rental car insurance policies lump personal effects coverage in with the personal accident insurance described above.

Differences Between Rental and Personal Auto Insurance

After explaining the terminology of rental car insurance policies, we can see that they cover pretty much the same things as personal car insurance policies. However, there are some differences:

• Lower or no deductible – Collision damage waivers typically have a very low or no deductible. This means that if there is damage to your rental vehicle, you will pay very little or nothing out of pocket.
• Jurisdiction – If you’re traveling abroad, your personal auto insurance policy (or the other forms of coverage explained below) may not be valid. For USA-based drivers, policies usually extend to Canada. If you are traveling elsewhere, you may want to purchase additional car insurance coverage.
  
• Stolen items – Personal auto insurance policies generally don’t cover the cost of items stolen along with the rented vehicle. These claims are usually handled by homeowners or renters insurance.
  
• No premium changes – You pay a single fee for rental car insurance. There are no monthly premiums that can increase after you make a claim. This is one of the primary reasons why people purchase additional coverage. 

Other Ways You May Be Covered in a Rental Car

Rental car insurance often protects your rental car, you, your passengers, and your things. However, these things may already be covered by policies you already have. Be sure to check the following along with, “Does AAA cover rental cars?” to make sure that you’re not spending money on rental car insurance unnecessarily:

• Personal auto insurance
• Your company’s insurance policy (if you’re traveling on business)
• Insurance from credit card
• Homeowners or renters insurance
• Travel insurance
• Health insurance

Some of these cover all of the same things that rental car insurance covers. Others cover certain elements of that coverage. You can take advantage of this if you are given the option to opt in or out of various parts of a full rental car insurance policy.

Personal Auto Insurance

Most personal auto insurance policies will cover you while driving a rental car in the USA or Canada. 

However, if you need to file a claim due to damage to or theft of your rental car, you will still have to pay the same deductible as your personal vehicle, and your insurance premium may increase. 

Business Insurance

If you are renting a car while traveling for business, your company may have its own insurance policy. Double-check with whoever approves expenses within your company to ensure you purchase only what is necessary. 

Credit Card

Some major credit cards cover rental car insurance as long as you use that card to pay for the rental. This is generally ‘secondary coverage,’ so it will only apply if no other insurance policy is available. That makes this a good option if you’re driving in a country other than the USA or Canada, where your personal policy doesn’t apply. If you are wondering how to rent a car without a credit card, our team has you covered. 

Don’t simply assume that your credit card will insure your rental car. While this coverage can be a nice money-saver, it is usually limited. Each credit card will differ, but here are some common restrictions:

• Length – This coverage will generally only cover a rental of a few weeks or less.
  
• Vehicle type – This coverage may be limited to basic rental options. It often will not cover specialty or luxury vehicles.
  
• Decline other coverage – If you accept any of the insurance options offered by the rental car company, you may invalidate any coverage from your credit card.
  
• Country – Even though we said that this coverage could be a good option outside of the USA and Canada, not all countries are included.

Homeowners or Renters Insurance

Your homeowner’s or renter’s insurance policy may cover the cost of personal items that are stolen along with your rental car. If so, this would render personal effects coverage redundant. 

Like your personal auto insurance, check on your homeowners or renters insurance coverage if you’re traveling internationally.

Travel Insurance

Some travel insurance policies will cover your medical costs or the costs of stolen items while you travel. If that’s the case, this coverage is redundant with the personal accident insurance and/or personal effects coverage.

Health Insurance

If you or your passengers are injured in an accident in your rental car, your health insurance may cover you. However, be sure to check that your health insurance applies in the state or country that you’re driving in.

Where can I buy rental car insurance?

If you’ve decided to buy rental car insurance, you still have another choice to make. Where should you buy it?

Rental Car Company

The rental car company will allow you to purchase coverage when you pick up your rental car. 

This is a simple option because it only requires you to sign a few extra forms and pay additional fees at the rental car desk. Any claims you make will be processed through the rental car company. To find out answers to things like what is the cheapest car rental company or how to get discounts on car rentals, contact our team today. 

Third-Party Insurance

Several companies specialize in rental car insurance policies. Although this option requires some effort on your part prior to your trip, it offers several advantages over buying insurance from the rental car company:

• Cost – Third-party insurance is often cheaper than equivalent policies offered by the rental car company.
• Customization – Rental car companies often offer a single “one size fits all” insurance policy. Shopping around allows you to find a policy that better fits your coverage needs.
• Comprehension – Insurance is complicated. Understanding your policy in the best of times is hard. And standing at the rental car desk, coming off a 4-hour flight, with 15 equally tired and frustrated people behind you in line, is certainly not the best of times. Buying your insurance policy beforehand lets you read your policy more carefully and better understand your coverage.

Particularly if you’re a frequent vehicle renter, third-party rental car insurance can save you money and provide better coverage in the long run.

Should I get rental car insurance? The Bottom Line

In many cases, buying rental car insurance is unnecessary. If you’re in the USA or Canada, your personal auto insurance policy, your normal auto insurance policy should still cover you. Elsewhere, your credit card or travel insurance may help. 

Another reason people may purchase additional rental car insurance is to avoid having to pay a deductible or increased premium if they damage a rental car. If this is important to you, buying rental car insurance may be a good option.

Since you are more likely to have an accident in a rental car than in your own car, you should make sure you’re covered.

We can help you find an insurance policy that will cover you in the case of a rental car accident or break-in. We can also help you understand how your premiums or coverage may change if you damage a rental car.  Just enter your ZIP code and a few other details, and we can find you the best rates in your area. Get a quote today.