Does My Car Insurance Cover Rental Cars? Before heading to the rental car counter, it’s important to familiarize yourself with the rental car insurance options to ensure you make an informed decision. Many drivers are unaware that they may already be covered by their personal auto insurance, the credit card used for booking, or other insurance policies.

Renting a car can be a convenient and cost-effective way to get around, whether you’re traveling for business or pleasure. But what happens if you get into an accident while driving a rental car? Will your car insurance cover the damages?

In this blog post, we will explore whether or not your car insurance policy extends to rental cars. We’ll discuss the different types of coverage that may apply, as well as any limitations or exclusions that you should be aware of. So before you hit the road in a rental car, make sure you understand how your insurance policy comes into play.

Does My Car Insurance Cover Rental Cars? 

Whether or not your car insurance covers rental cars depends on the specifics of your policy. Some car insurance policies have provisions that extend coverage to rental cars, while others do not. It is important to review your policy and contact your insurance provider to understand what is covered and what is not. In some cases, you may need to purchase additional coverage through the rental car company or a separate insurance provider. It is always better to be proactive and informed about your coverage options before renting a car to avoid any unexpected expenses in case of an accident or damage.

Do I Need Insurance to Rent a Car?

Before driving a rental car, it is essential to have liability car insurance at the very least. This type of insurance provides coverage for injuries and property damage caused to others accidentally, and it is mandatory in most states. Additionally, you may desire other forms of coverage to assist with the repair of a rental car damaged by you or to cover your medical expenses in the event of an accident. It is not necessary to purchase all of this coverage from the rental car company as you may already have some coverage through existing policies.

• Your personal car insurance policy
• The credit card you used to book the rental car
• Health insurance
• Travel insurance
• Non-owner car insurance
• Umbrella insurance

Does My Personal Car Insurance Cover Rental Cars?

Your personal auto insurance usually provides coverage for rental cars with the same limits and deductibles as your policy, but only for personal use, such as during vacation. It does not cover business use, like driving a rental car for work purposes. There may be gaps in coverage between your personal car insurance and the rental car, such as the rental company’s “loss of use” fee for income lost while the car is being repaired.

Liability Car Insurance

Liability car insurance pays for injuries and property damage you accidentally cause to others,For instance, if you accidentally damage someone’s fence while driving a rental car, your car insurance policy will provide coverage up to the limits you selected. If you have liability insurance with limits of $100,000 for bodily injury to one person per accident, $300,000 for bodily injuries to more than one person per accident, and $100,000 in property damage per accident (known as 100/300/100), you will be covered up to those limits in the event of an accident in your rental car.

Collision and Comprehensive Insurance

Collision and comprehensive insurance can pay to repair or replace a rental car after problems like car accidents, theft, fire, floods, collisions with animals, falling objects, severe weather and vandalism. Your car insurance deductible will apply if you need to file a car insurance claim for a rental car under your collision or comprehensive coverage.

Personal Injury Protection (PIP) and Medical Payments (MedPay)

If you have personal injury protection (PIP) and/or medical payments coverage (MedPay), your insurance will provide coverage for you and your passengers’ medical expenses in the event of an injury while driving a rental car. For instance, if you sustain injuries while driving a rental car, your PIP coverage can pay for costs such as medical bills, lost wages, and replacement services for activities you are unable to perform due to the injuries, such as household chores and childcare. MedPay will cover medical expenses for you and your passengers regardless of fault in an accident. It is not offered in all states and is typically available in small amounts ranging from $1,000 to $5,000.

What Are the Different Rental Car Insurance Options?

When renting a car, you will have the option to purchase rental car insurance from the rental company. There are several types of coverage available, each with its own benefits. Collision Damage Waiver (CDW) covers damages to the rented vehicle in case of an accident, while Loss Damage Waiver (LDW) covers loss or damage to the rented vehicle due to theft, vandalism, or other non-collision events. Personal Accident Insurance (PAI) provides coverage for medical expenses if you or your passengers are injured in an accident, and Personal Effects Coverage (PEC) covers any personal belongings that are stolen or damaged while inside the rented vehicle. It is important to carefully consider each type of coverage and determine which ones are necessary for your trip before making a decision.

Collision Damage Waiver

A collision damage waiver (CDW) provides protection for your rental car in case of damage or theft, and is also known as a loss damage waiver (LDW). Typically, the cost of a CDW is around $30 per day.

A CDW can be a good option if you don’t have:

• A personal car insurance policy that would cover damage to a rental car.
• A credit card with rental car coverage.
• A third-party rental car insurance policy.

Here are scenarios in which you may want to pay for a CDW:

• You have car insurance but don’t want to risk your insurance costs going up if you cause a car accident while driving a rental car.
• You don’t want the hassle of identifying any gaps in your credit card or car insurance coverage.
• You don’t want to be responsible for any extra charges due to vehicle damage.

If you decline a CDW, the rental car company could charge you for the following expenses:

• Administrative fees. These are extra costs associated with the claims process.
• Diminished value. This is the decrease in the rental car’s value after the repairs are made.
• Loss of use. This is the money the rental car company loses while your rental car is being repaired.
• Towing. You can be charged for towing if your rental car is undrivable after an accident.

Supplemental Liability Insurance

Rental car companies offer supplemental liability protection (SLP), which provides coverage for property damage and bodily injuries caused accidentally to others. Depending on the company, this coverage may be referred to by a different name, such as “liability insurance supplement” (LIS) for Hertz. The policy limits vary by company, with Alamo and Enterprise offering up to $300,000 in liability coverage and Hertz providing up to $1 million in most states and up to $2 million in California and Florida.

Do I need to buy liability coverage from the car rental company?

It’s important to note that your personal car insurance policy may already provide sufficient liability coverage. Liability coverage can protect you from financial loss if you’re at fault in a car accident and are required to pay for damages or injuries sustained by other parties involved. However, it’s crucial to review your policy carefully to ensure that you have the appropriate level of coverage for your needs. You may need to consider additional coverage options if you frequently drive long distances, transport valuable goods, or use your vehicle for business purposes.

Personal Accident Insurance

Personal accident insurance (PAI) provides coverage for the medical expenses of both the driver and passengers in the event of an accident while operating a rental vehicle. Typical coverage includes:

• Accidental death and dismemberment
• Ambulance bills
• Medical expenses

Do I need to buy personal accident insurance from the car rental company?

It’s possible that you already have sufficient coverage through your PIP and MedPay coverage in your personal car insurance policy and through your health insurance policy.

Personal Effects Coverage

Personal effects coverage (PEC) provides protection for your personal belongings in case they are stolen from the rental car, including items like your laptop or luggage. Some specific personal items may not be covered, as is the case with Hertz, which does not include PEC coverage for items such as:

• Animals
• Bicycles
• Eyeglasses, contact lenses and sunglasses
• Hearing aids
• Money
• Prosthetic devices

Do I need to buy personal effects coverage from the car rental company? 

It is possible that your home, condo, or renters insurance policy may provide coverage for personal belongings stolen from a rental car. Before purchasing additional coverage through the rental car company, it is important to review your existing policies to determine if you already have adequate protection. However, it’s also important to note that there may be limitations and exclusions in your policy, so it’s best to speak with your insurance provider to understand the extent of your coverage. Additionally, some credit card companies offer protection for rental cars and their contents, so it’s worth checking with them as well before opting for additional coverage.

Roadside Assistance

• Change a flat tire
• Fuel delivery if you run out of fuel
• Jumpstarts for a dead battery
• Locksmith if you are locked out of the rental car
• Towing

Do I need to buy roadside assistance coverage from the car rental company? 

If you’re wondering whether you need roadside assistance coverage, it’s worth checking if you already have it through other means. Many personal car insurance policies, credit cards, and auto clubs like AAA offer this type of coverage as part of their services. Before purchasing additional roadside assistance coverage, review your existing policies to see if it’s already included and what exactly it covers. This can help you avoid paying for duplicate coverage and save money in the long run.

How To Save Money on Your Next Rental Car

Book in advance

Booking a rental car in advance can often result in lower rental rates as opposed to waiting until the last minute. This is because car rental prices tend to increase as the rental date draws closer. By booking early, you can take advantage of early-bird discounts and promotions offered by car rental companies. Additionally, advanced booking gives you more flexibility and time to compare rates and find the best deal that fits your budget and needs.

Rent from offices close to the airport

When looking to rent a car, it is wise to consider locations near the airport rather than directly at the airport. Although you may need to pay for an Uber or taxi to get to the rental office, you can still save a lot of money in the long run. Typically, car rental rates are significantly cheaper at locations that are not situated at airports. By opting for a rental location nearby, you can avoid surcharges and additional fees typically associated with airport rentals. Additionally, if you’re renting for an extended period, even the cost of transportation would be far less than what you would pay for renting from the airport itself.

Use membership perks

Several companies, including Costco, AAA, and AARP, have partnered with rental car agencies to offer discounted rates to their members. It’s worth checking if you are eligible for any of these affiliate price breaks before booking your next rental car. These partnerships can provide significant savings on rental car expenses and make it easier for travelers to stick to their budget. Additionally, many credit card companies offer perks such as free rental car insurance when you use their card to pay for the rental.

What To Look Out for When You Rent a Car

Forced upgrades

Upon arriving at the car rental counter, you may be informed that there are no cars available in your designated class. In this situation, you can opt to wait or upgrade to a vehicle in the next class. While the lack of available cars may be true, the practice of charging for an upgrade is not standard in the industry. Presenting the choice between waiting or paying more is a tactic used to take advantage of customers at the car rental counter. However, you have the option to request to speak to a supervisor or take your business to another car rental company.

Fuel purchase options

Another potential problem with car rentals is the fuel purchase option, which enables you to skip refilling the car before returning it. Erik Hastings, the host of the PBS series Beyond Your Backyard, describes this charge as “nefarious.” “There are usually three options for refueling,” he says.

1. Buy a full tank at the start. You pay for a full tank in advance and then return the car on empty. The problem: If you don’t return the car on empty, you’re paying more than you should.
2. Let the car rental company refuel the vehicle. But the company can charge much more than the price of gas—you could end up paying $10 a gallon. That’s a pricey option.
3. Refill the car before you return it. But you have to make sure you refill it all the way and keep a receipt. Otherwise, your car rental company could charge you for gas.

So which one do you pick? It depends, says Hastings

He says that you can either purchase a full tank of gas when you rent the car and return it empty, or you can fill up the tank before returning the car to the rental location. Using Waze can help you find nearby gas stations, allowing you to economically refill the tank before returning the car.

Car seats 

Car rental costs can quickly increase due to charges for children’s car seats, which are criticized by Avi Wilensky, the founder of Up Hail. These fees, which can amount to $10 to $15 per day, significantly impact parents with young children who are looking to save money while traveling. According to Wilensky, paying more in rental fees than the actual value of the car seat can make parents feel exploited, as the fees are often unexpected and not included in the initial booking rate. To avoid these charges, it’s recommended to bring your own car seat and check it with your luggage when flying, as airlines typically do not impose additional fees for this.

Rental Car Insurance Alternatives

It’s essential to understand your existing coverage options before reaching the rental car counter to avoid purchasing redundant coverage from the rental company. Besides personal auto insurance, there are other policies to take into account.

Credit Card Coverage

If you use your credit card to pay for the rental car, your credit card may provide rental car coverage. Credit cards provide primary and secondary rental car insurance, and here is the contrast between the two:

Primary coverage

Your credit card will be the first to pay out a claim, so you won’t have to involve your car insurance company or pay a car insurance deductible.

Secondary coverage

This indicates that your credit card will only cover the remaining amount not included in your car insurance. However, your credit card could provide reimbursement for deductible and various fees like towing costs and loss of use. Secondary coverage is the common type of coverage provided by the majority of credit cards.

Health Insurance

In the event of a car accident injury, your health insurance will pay for medical expenses incurred during domestic travel, subject to your deductible, copays, and coinsurance.

Home, Condo and Renters Insurance

Homeowners insurance, condo insurance, and renters insurance all provide coverage for your personal items in the event of theft, including theft from a rented car. For instance, if someone steals your laptop from a rental car.

Non-Owner Car Insurance

Non-owner car insurance is a type of liability coverage designed for individuals who do not own a vehicle but require insurance for cars they drive, making it an ideal choice for those who often rent vehicles.

Roadside Assistance Insurance

Roadside assistance insurance generally applies to rental cars and includes issues such as dead batteries, flat tires, locking keys inside the car, and running out of fuel. Roadside assistance can usually be obtained from your car insurance provider, credit card, or an auto club like AAA. For instance, AAA members are eligible for roadside service when driving a rental car.

Third-Party Rental Insurance

Certain insurance companies offer standalone rental car insurance policies that you can buy before your trip. It’s advisable to compare quotes before arriving at the rental car counter, as you may find cheaper policies than those offered by the rental car company. Here are a few companies that provide rental car insurance:

• Allianz Global Assistance
• Bonzah
• Rental Cover
• Sure

Travel Insurance

Certain travel insurance providers offer coverage for rental cars, although it might have restrictions. For instance, specific AIG travel insurance packages provide coverage for rental car damage up to $50,000 and $50 for roadside assistance, but do not include liability coverage.

Umbrella Insurance

Umbrella insurance covers the excess amount of a car crash in a rental car that surpasses your liability limits on other policies, such as personal auto insurance or home insurance, up to your policy limits.

Is Rental Car Insurance Worth It?

In certain situations, rental car insurance may not be necessary if you already have similar coverage through your personal car insurance policy. It may also be unnecessary if there is duplication between the coverage offered at the rental car counter and your existing coverage on other insurance policies, such as health insurance and homeowners insurance. Rental car insurance from the rental car company could be beneficial if you have limited alternatives or need to fill any gaps in coverage from your current policies. For instance, if you have a car insurance policy but lack collision or comprehensive insurance, you might consider purchasing the CDW from the rental car company to protect against any damages to the rental car. However, even if you are lacking certain types of coverage, like collision and comprehensive insurance, it is advisable to compare prices before arriving at the rental car counter. You may find better rates for rental car insurance from a different company.

Conclusion

Understanding whether your car insurance covers rental cars is essential for anyone planning to rent a vehicle. While there is no one-size-fits-all answer, it is crucial to review your policy and consult with your insurance provider to determine if rental cars are covered. Some insurance policies may include coverage for rental cars, while others may require you to purchase additional coverage. By taking the time to understand your policy and potential gaps in coverage, you can make an informed decision and ensure that you are properly protected when renting a car. Remember, each insurance policy is unique, so it’s important to review your specific policy details and consult with your provider for personalized advice.

Faqs

Is it advisable to rent a car?

A rental car is a huge convenience over having to wait for public transportation or paying for a taxi any time you need to travel farther than walking distance. But hidden costs can put a crimp in your wallet if you’re not aware of them.

Are car rentals worth it?

The monthly cost is often lower than a traditional auto loan payment. You are (usually) not responsible for repairs needed on your car for the length of the lease or rental. Renting or leasing a new-model car is cheaper than buying one. You don’t need to try to sell the car when you want to upgrade.

Why is car rental good?

No hidden costs or upsells: With rental cars, the car you see is the car you get, with the price as marked and no hidden costs to decipher. Extended warranties: Many rental car companies offer a limited car warranty on your car purchase — usually one year/12,000 miles – which can add to your peace of mind.

Is car rental business legal?

To operate a car- rental business in India, the business ought to be registered as a legal entity, compliant with all regulatory and statutory requirements. One can register their business as a partnership firm, LLP, private limited company or a sole proprietorship based on one’s capacity and business requirements.