Does Your Car insurance Cover Rental Cars? Do You Need It?
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If your personal auto insurance policy includes full coverage, your insurer may cover you when driving a rental car. However, there are some instances when buying rental car insurance is worth it, like if you want to protect your premium from increasing, if you have a high deductible or if you want higher coverage limits while driving the rental car.
Don’t confuse rental car insurance with rental reimbursement coverage. Rental car reimbursement covers the cost of renting a car while your own car is in the repair shop because it was damaged in a covered claim. If you plan to rent a car and want to know if that car is covered by your personal auto insurance, keep reading.
Does My Car Insurance Cover Rental Cars?
Ask your car insurance agent if your auto policy coverage extends to your rental car before you rent a car. Coverage is offered by many national carriers, like Allstate and State Farm, but you should always double-check.
If your personal auto policy covers rental cars, then the rental car should have the same types of coverage as your own car. For example, if you have full coverage (comprehensive and collision), then your rental car should also be covered for comprehensive and collision claims.
Coverage limits and deductibles should transfer to the rental car, as well. For example, if you have $25,000 in collision coverage with a $500 deductible on your own car and you accidentally drive your rental car into a tree, then your insurance company should cover up to $25,000 in damages to the rental car after you pay a $500 deductible.
Do I Need Rental Car Insurance?
Rental car insurance is necessary if you have no other source of coverage. Generally, you should consider buying rental car insurance if the following apply to your situation:
- You don’t have personal auto insurance.
- Your personal auto insurance policy does not cover rental cars.
- You’re driving the rental car for business, and commercial driving is not covered under your personal auto policy.
Even if you have personal auto insurance, you may still want to consider rental car insurance for the following scenarios:
- You have a high car insurance deductible.
- You want to prevent a rental car accident from increasing your personal auto policy premium.
- You have low coverage limits and want the higher limits from a rental car insurance policy.
- You don’t have comprehensive or collision coverage.
What Are the Benefits of Rental Car Insurance?
With rental car insurance, you can have higher limits and lower deductibles along with some coverages you may not already have in your personal auto policy. You can also prevent your personal auto policy premium from increasing after a rental car accident.
Claims filed through rental car insurance will not affect your personal auto policy. If you file a claim with your personal car insurance company, you will likely see your rates increase so expect a higher surcharge if you were responsible for the car accident. Buying rental car insurance stops your car insurance premiums from increasing should things go wrong.
You want higher limits and a lower deductible. Rental car insurance can offer higher limits and lower deductibles during your time with the rental car. Traveling long distances in a rental car, for example, can increase your exposure to accidents. If you rely on a personal auto policy with a high deductible and minimal coverage, you’ll have high out-of-pocket costs without rental car insurance if you have an accident.
You can add a loss damage waiver if you don’t carry collision and comprehensive coverage. Loss damage waivers release you of liability when the rental car is damaged, stolen or vandalized — similar to comprehensive coverage in a personal auto policy. Rental cars are typically temporary arrangements and buying a loss damage waiver can be a cost-effective alternative to adding full coverage to your personal auto policy if you don’t have it already.
What Does Rental Car Insurance Cover?
Rental car insurance generally carries four main types of coverage:
- Liability: Pays for property damages and injuries when you are the at-fault driver in a car accident.
- Loss/collision damage waiver: Releases you of liability when the rental car is damaged, stolen or vandalized.
- Personal accident insurance: Covers your and your passengers’ injuries when you are in a car accident.
- Personal effects coverage: Covers your personal belongings if stolen from the rental car.
Insurance You May Already Have
Since your personal auto policy covers your rental car (depending on your insurer), you may already be covered for certain types of accidents. Below, we’ll recap the basic coverages you may already have.
Most states will require you to carry property damage and bodily injury liability coverage. Other states may also require uninsured/underinsured motorist coverage and medical payments coverage or personal injury protection.
- Property damage (PD) liability: Pays for other people’s damages when you are the at-fault driver in a car accident.
- Bodily injury (BI) liability: Pays for other people’s medical bills when you are the at-fault driver in a car accident.
- Uninsured/underinsured motorist (UM/UIM) coverage: Covers your property damage expenses and medical bills if the other driver is at fault but is uninsured or has insufficient coverage.
- Medical payments: Pays for your or your passengers’ medical and funeral expenses, regardless of which driver is at fault.
- Personal injury protection (PIP): Pays for your medical expenses, lost wages and funeral expenses, regardless of which driver is at fault.
You may already carry comprehensive and collision coverage (also called full coverage). Your lender will typically require you to maintain full coverage if you’re still repaying your auto loan.
- Comprehensive: Pays for non-collision-related claims, such as theft, vandalism and damages by fire, hail or windstorm.
- Collision: Covers property damages when you are the at-fault driver in a car accident, you crash into a structure (e.g., mailbox, tree, lamppost) or you were in a rollover accident.
Which Insurers Cover Rentals?
The following national carriers extend coverage to rental cars if you have an active personal auto insurance policy:
- American Family
- Liberty Mutual
If you do not have auto insurance or you want to explore rental car insurance options besides what the rental car company offers, you can find coverage with the following carriers:
- Allianz Global Assistance
- Insure My Rental Car
- Rental Cover
Credit Card Companies With Rental Car Coverage
Your credit card company may offer some rental car coverage without you realizing it. You may want to call your credit card company to remind you of your available benefits or ask if they can send you a benefits brochure.
Below are some examples of credit cards that will cover the cost of rental car insurance:
- Capital One Venture X Rewards Credit Card
- Chase Sapphire Preferred
- Platinum Card from American Express
- United Explorer Card
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