Rental Car Insurance Considerations

Nov 22, 2023 | Personal Insurance

If you already have liability coverage or collision coverage, it will extend to rental cars in the US and, depending on your insurance carrier, possibly Canada and Mexico. Rental cars are typically covered for collision and comprehensive damage. If your car is damaged in a collision with another vehicle or object, collision insurance will repair it. Typically, collision coverage is used in auto accidents. While liability for injuries is covered by comprehensive insurance, damage from theft, fire, vandalism, and natural disasters is not.


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Is a rental car covered by your credit card?

It depends, is the succinct response. The credit card companies provide primary or secondary auto insurance coverage, but the majority of them only cover claims for stolen or damaged cars. He advised you to find out whether the coverage is primary or secondary on the credit card you used to make the reservation and rent the car. Most credit card insurance, according to the Insurance Information Institute, is secondary insurance that “kick[s] in] after your personal insurance policy or the insurance offered by the rental car company are utilized.”

The secondary credit card coverage won’t help you if you don’t own a car and don’t have primary auto insurance; instead, you’ll need to buy insurance from the rental agency.

That benefit reimburses you for covered theft, damage, or administrative and loss-of-use charges imposed by the rental company, as well as reasonable towing charges that occur while you are responsible for the vehicle, if you do not have personal automobile insurance or any other insurance. However, this doesn’t provide liability protection if you cause damage to another vehicle in an accident or hurt its occupants.

It is suggested that you purchase non-owner car insurance if you frequently travel and use rental cars. Car insurance for non-owners essentially provides liability-only protection for drivers.


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Risks associated with not having rental car insurance

If you choose not to purchase insurance from the rental car company and do not have personal auto insurance or non-owner car insurance, you are responsible for any damages. If another vehicle is involved in a car accident, you will also be liable for the resulting damages and injuries, and you risk facing legal action.

Things to Think About Before Renting a Car

Before going to the auto rental counter, drivers should do their research. Review your auto insurance policy in detail and ask your credit card company about the benefits of auto insurance. By using a few safety measures and asking the right questions, you can protect yourself and save money.

The insurance options that car rental companies offer are numerous and may be covered by your existing policy.

At the counter, they typically have the following items available:

Loss Damage Waiver is another name for Collision Damage Waiver (CDW) (LDW). You probably won’t need this additional protection if your own car has comprehensive and collision coverage. (Comprehensive insurance protects against damage to vehicles resulting from mishaps like fire, theft, wind, hail, collisions with deer, vandalism, or theft. In the event that a car is damaged in a collision or rollover, collision insurance will pay for the necessary repairs or the car’s actual cash value. An extra $10 to $20 per day may be required for this protection.

Liability insurance pays for medical costs and property damage sustained by third parties as a result of a car accident brought on by the insured’s negligence. If your own vehicle is sufficiently insured, you might want to forgo this additional liability protection. This extra insurance may run you $7–$14 per day.


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The renter and their passengers are covered by personal accident insurance for medical expenses incurred in a car accident. You won’t likely need this additional insurance if you have sufficient health and disability insurance, or if you are protected by personal injury protection under your own auto insurance. A typical daily cost is between $1 and $5.

Theft of personal items while they are inside a rental car is covered by personal effects coverage. It usually already is covered if you have homeowners or renters’ insurance. It might be more economical to buy a floater under your home or renters insurance policies if you frequently travel with expensive jewellery or sporting goods, so the items are completely protected when you travel. This coverage typically costs $2 to $5 per day.


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Before you arrive at the rental car counter, review your auto insurance policy, or give your insurance agent a call.

Check to see if an insurance rider can be added to your current policy for a small fee if it doesn’t already cover coverage for a rental car.

Numerous credit cards come with some sort of collision and theft insurance. This means that the credit card company will only pay claims after other insurance coverage has been exhausted. In most cases, these benefits are secondary to your personal auto insurance or the insurance of the car rental company. The NAIC advises you to contact your credit card provider and inquire about benefits.


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It might be a good idea to purchase liability insurance and collision damage waiver at the car rental counter if you don’t have personal auto insurance and your credit card doesn’t offer benefits.

Keep in mind that there might be restrictions on the coverage your current auto insurance policy offers if it is a longer-term rental (for example, a week, a month, or more). For more information, speak to your insurance provider or agent.


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A non-owner auto insurance policy offers benefits in addition to coverage for a rental car, so if you don’t own a car you might want to think about getting one.

Consult your employer for advice as a personal auto policy won’t typically apply when you’re traveling for work.

If you have questions about car rental insurance, you are not the only one. Consult your state’s insurance department if you have questions about the insurance options for car rentals or suspect that a rental company is giving you false information.


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Insurance for Rental Cars

The three standard types of coverage that rental cars typically include are third-party coverage, theft protection, and damage coverage (technically known as Collision Damage Waiver) (Third-Party Liability). These are included in your deal when you book a car.


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