In its basic form, rental car insurance protects you when you’re on the road. But the circumstances for renting may change based on specific conditions. For instance, in the majority of cases, your personal vehicle policy may cover the insurance of the rental. In other cases, you might need additional insurance that the renter provides. Lastly, policies can overlap, leaving you to pay for services you already have.
Let’s take a thorough look at insurance for rentals and how it works. We’ll review types of personal injury liabilities and risks, the benefits of PIP (personal injury protection), and the consequences of driving a rental without adequate insurance.
Insurance for a Rental Car
Rental car companies offer insurance that allows a person to operate their vehicles. With the policy in place, you can drive off with at least enough insurance along with optional coverages to protect your interests.
There’s always the possibility you won’t need or even want every coverage option but things like collision loss waiver may be useful. As the saying goes, it’s better to have insurance and not need it than to not have it and find yourself needing it.
Need for Insurance From a Rental Car Company
Companies are not likely to turn over the keys to uninsured drivers. You need rental insurance if you don’t own a car which means you don’t have insurance.
If you already have a policy, you have the option to skip the renter’s coverage. Rental insurance comes with the basics, enough to allow you to drive legally. But limited coverage always leaves you at risk if you’re involved in a specific fender bender or worse. You could find yourself responsible for paying off any damage that results from an incident.
Besides insurance from the rental company, you also have the option of getting car insurance from third-party vendors. Under these conditions, you can probably find lower rates compared to rental car organizations.
Rental Car Insurance Cost
Fees for rental cars are expensive, easily doubling rental costs if it’s full coverage. It can actually cost less to increase your insurance limits than to purchase two weeks of insurance for your rental. For the most part, throughout the country, rental cars tend to ask consumers to have a minimum insurance requirement. But no state actually mandates comprehensive or collision coverage.
Of course, driving without insurance is a big risk. There’s no telling what may happen on the road. Getting pulled over by local law enforcement alone could land a hefty ticket and a confiscation of the vehicle. An accident can lead to major expenses at your doorstep, not to mention legal complications that can cost thousands. Or more.
It simply makes sense to have PIP coverage.
Primary vs. Secondary Rental Car Insurance
Car rental insurance may be available in either primary or secondary options. Primary typically covers all instances of insurance needs, based on terms. With primary, you only need to file one claim.
Secondary insurance kicks in you exhaust all other forms of auto insurance. Secondary insurance comes in to cover the remaining expenses and can also cover deductibles. So, if there were an accident involving the rental car and you have secondary insurance, you’d need to file claims with individual insurance companies.
Rental Car Insurance Types
Car rental companies offer a spectrum of coverage options that will fit any need. But there are specific categories you want to look at before signing the agreement.
Liability
You keep liability coverage to safeguard yourself and the community. Should you get in an accident, or damage property or another human being while driving, you’ll have basic financial protection. If you already own sufficient coverage, you may not need insurance from the car rental. Having a conversation with your insurer can help avoid duplicating services.
Personal Accident
Personal accident insurance aids in the payment of medical bills resulting from accidents involving the rental. You may have health insurance that covers some of these areas. If your health insurance is compatible, you can skip what the rental company offers.
Personal Effects
Personal effects coverage protects personal items that get stolen from the car.
If you own homeowners’ or renters’ insurance, you likely have a personal property clause that generally covers stolen personal items. The policy covers a percentage of personal property value. The clause is known as “off-premises coverage.” A deductible may apply to any claim.
Loss / Collision Damage Waiver
Also known as CDW or LDW, collision and loss damage waivers aren’t necessarily insurance. The coverage kicks in if you are responsible for any damage to the rental and covers the cost of repairs. For rental companies, a vehicle in need of money constitutes a loss of revenue and the waiver rectifies this. If you choose to not purchase the waiver from the rental company, any damage to the vehicle comes out of pocket.
A rental agency may also charge for “loss of use” (lost rental income) should the car need to be in a repair shop. In general, insurance policies do not reimburse loss of use. Read the rental agreement studiously to clarify what charges you could incur should you return a damaged rental.
Take note that the waiver won’t cover damage that results from driving on unpaved roads or moving violations.
Rental Car Insurance: Credit Cards
You could utilize a premium credit card for a rental. Some cards offer primary coverage for rentals. Primary coverage will have high limits, making them capable of handling an entire claim. That means your personal insurer won’t hear about the claim, potentially impacting your record and raising your rates.
Some standard cards include secondary coverage. The feature has lower limits and requires a claim to your insurance company. You have to book a rental with that credit card to qualify for its coverage. Call the toll-free number on the back of your card and talk to an agent about options. If your creditor offers coverage for rental cars, you can decide to not go with rental agency insurance altogether.
Credit card issuance is often considered secondary. That means the coverage will pay expenses and deductibles that exceed any primary insurance company ceilings. Some credit card providers could exclude coverage for specific types of vehicles, such as motorcycles, trucks, motorhomes, or luxury vehicles.
What Credit Cards Offer Rental Car Insurance?
Here is a list of prominent creditors that provide cards you can use for both car rentals and coverage.
- Chase Sapphire Preferred Card
- Chase Sapphire Reserve
- Capital One Venture X Rewards Credit Card
- Ink Business Unlimited Credit Card
- Ink Business Preferred Credit Card
- Ink Business Cash Credit Card
- United Club Infinite Card
- United Explorer Card
- United Business Card
- United Quest Card
- An American Express card enrolled in the company’s Premium Car Rental Protection program
Travel Rental Car Insurance
Travel insurance programs may offer cover collision and loss of use. The price may cost less than the fees that come from the rental car company.
International Car Rental Insurance
In general, standard U.S. auto insurance companies do not cover international rentals. So, traveling outside the states to Canada or Mexico may not fall under their insurance umbrella. That means if you cross those borders, you may no longer have insurance. In this case, you may have to negotiate coverage with the rental company.
Rental Car Reimbursement Coverage
Rental car reimbursement is not a form of insurance. It’s an add-on to standard car insurance. It covers the cost of a rental while your car is in the repair shop after a loss.
Rental reimbursement is coverage for a vehicle priced at a per day set dollar amount. An example would be you covering up to $100 a day for an incapacitated rental car with a $2,000 total. You can upgrade rental policy reimbursement coverage with a higher per-day limit for more protection.
You can add reimbursement coverage to a personal auto insurance policy. There will be maximum payout limits and daily reimbursements agreed upon at the time of purchase.
Should You Get Insurance for a Rental?
If you have no policy of your own, rental car insurance cannot be bypassed. In most states, liability alone is mandatory, meaning you cannot operate a vehicle without insurance.
Also, look closer at rental coverage if any of the following scenarios apply to you:
- You only have insurance under commercial car coverage
- Any current policy has no collision or comprehensive coverage
- You cannot afford to get stuck with a high deductible
How Much Does Rental Car Insurance Cost?
The cost of car rentals fluctuates. Not surprisingly, they differ from state to state and even city to city. You can also expect car rentals at specific locations — say, an airport — to charge more than local offices. Truthfully, you may mysteriously find prices go up and down throughout the day.
Contrary to popular belief, NerdWallet advises us to rent as late as possible. On average, NerdWallet says consumers pay almost $75 more for a rental when they book three months in advance.
Check out the average per-day prices from the more popular rental car companies.
Website iwillteachyoutoberich provides the top four third-party companies that offer solid car rental insurance.
Another consideration is renting locally. A smaller car rental company may be less expensive and may even forego insurance. We’re talking small towns such as, say, Modesto, CA, as opposed to big cities like Los Angeles or Chicago.
Conclusion
Outside of responsible driving, insurance is your most valuable asset on the road in an unknown vehicle.
Renters offer a range of insurance policies that either stand on their own or can complement a personal policy. Or you can go with your policy altogether if its criteria fit the bill. But remain aware of overlapping terms. The last thing you want to do is pay for additional coverage you don’t need. Review your policy and explore other channels like your credit card company, health insurance, or a homeowners’ or renters’ policy.
Most consumers pretty much only compare pricing and models when renting. But car insurance must always be a major consideration.
Rental Car Insurance FAQs
What happens if your rental gets damaged and you have no insurance?
There aren't many rental companies that will let you take one of their cars without insurance. But like any situation where you're not insured or underinsured, you are responsible for any damage that results from your driving.
Will renters' insurance impact my credit score?
Applying for car insurance is something credit companies look at, but they tend to not look too closely at car rental insurance. The action doesn't impact credit scores as it's viewed as a "soft" inquiry.
What's not covered by car rental insurance?
Most agreements deal with protecting the car. At the start, they may not initially cover important items like wage losses, pain and suffering, medical expenses, etc. If you're renting, investigate what additional PIP covers personal expenses which can result from a car accident.
Any incident that results from breaking the law — speeding, intoxication, drug use — negates the policy and you're stuck with the percussions. And if your plan doesn't specify a natural disaster, you cannot claim damage if, say, a flood washes the car into a river.
Can I be rejected for insuring a rental?
As long as you have a valid driver's license and a secure method to make the payment, you should have no issue getting rental insurance in some form.
Jeffrey Nadrich
Jeffrey Nadrich is a nationally-recognized California plaintiff’s personal injury attorney. He is a graduate of UC Berkeley and UC Hastings College of the Law. He has successfully represented thousands of injury clients over the last 40 years.
