Rental Car Insurance: Do You Need It?

Renting a car gives you the same ease of transportation that owning a car provides, but without having to worry about the same costs. But whether it’s a rental car or your own, you still need to make sure you have auto insurance coverage before getting behind the wheel. Especially in the case of driving a car that is not your own, you want to make sure you have rental car insurance.

Whether it’s rental car coverage or homeowners insurance, these policies are here to make sure you’re not paying out of pocket for any accidents. Insurify is here to help you find the best rates on insurance policies. Getting quality coverage shouldn’t cost you an arm and a leg. All it takes is a few minutes to set up your profile so we can give you a side-by-side quote comparison!

Rental Car Insurance: The Basics

One of the great benefits of renting a car is that you don’t need to have your own personal auto insurance policy—or any of the other costs or responsibilities that come with car ownership—in order to have the temporary convenience of a car. Unlike the work that goes with setting up your own personal car insurance, you can simply buy car insurance coverage at the rental counter.

However, this means that it is just a temporary policy with coverage options that will only protect you from accidents related to the rental car and not for other mishaps that happen during your trip. For example, if you go to the hospital on vacation for a reason unrelated to your rental car, you should have your own health insurance policy or travel auto insurance to cover medical costs.

What It Covers

If you choose to rent a car, it is smart to insure yourself so that you’re not left paying entirely out of pocket for any damage, loss, and liability expenses you incur while you’re behind the wheel. Even worse, if the rental vehicle is stolen or totaled and you don’t have coverage, you might find yourself buying the rental car company an entirely new car to replace the loss.

Similar to other policies from standard insurance providers, rental car insurance is a bundle of different coverage options that apply to different situations. In some cases, an auto insurance policy you have for your own car can actually be applied to a rental car. If you are ever unsure of what your coverage options are, you can speak with an insurance agent who can help you out.

The Four Types of Car Rental Insurance Coverage

Typically, car rental companies will have four different types of coverage that you can choose to accept or decline when you’re checking out your rental vehicle. These differ slightly from what you would be offered by an auto insurance company just because rental is temporary coverage, but they protect you in more or less the same way to give you peace of mind behind the wheel.

However, note you might already have some (or all) of these types of coverage from other pre-existing policies you own, so be sure to look over your own insurance options and your coverage limits before you make any extra purchases at the counter. In some cases, you might just need one or two types or even just an add-on, rather than spending money on all of them.

Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW)

Essentially collision insurance, this has you covered in the case of damage to the rental car. In the case of a standard auto accident where you crash into something accidentally, having this type of coverage will make sure that you’re not left paying for repair costs if the rental car is damaged. This even protects your rental car from theft if it is stolen while under your contract.

You might already have this coverage through a car insurance policy you already own or even through your credit card company. If you already have an auto insurance policy for your own car, check if you have collision and comprehensive coverage. This could extend to a rental car if you rent in the U.S. or Canada. In this case, you would still need to pay your deductible.

Liability Coverage

Unlike collision insurance, which protects the rental car against damage or theft, liability insurance is here to protect you against damage you might cause to other people’s vehicles or personal property. Say you’re found at fault for causing a fender bender or even property damage, like backing up into someone’s fence. This coverage can help you avoid paying out of pocket.

You may already have this through your own car insurance policy with liability insurance. Note that there could be international exclusions on a rental agreement if you rent a car outside of the U.S. or Canada. You can also buy additional protection at the rental agency if your own policy only provides minimal coverage. This will typically cover damage from $300,000 to $1 million.

Personal Accident Coverage

Personal accident insurance is here to help you pay for medical bills in the case you and/or your passengers are hurt in an accident. The last thing you want to worry about on vacation is going to the hospital and making medical payments in a foreign country. Some car rental companies will use this coverage for emergency medical care, transportation, and other unexpected costs.

You might already have this through your own health insurance policy. Check to see if your pre-existing policy offers international protection or travel medical insurance. Also, your own auto insurance policy might offer personal injury protection (PIP) or medical payments coverage for medical expenses, like ambulance or hospital bills, in the U.S. or Canada.

Personal Effects Coverage

With this coverage, you have peace of mind knowing that your personal items are covered (up to a certain cash value) if they are stolen from the rental car. Similar to personal property coverage, this type of car rental insurance makes sure you get a reimbursement to help pay the costs of replacing your things. Items like luggage, camera equipment, and more are all insured.

You might already have this through your own homeowners or renters insurance policy. Check your policy or speak with an agent to see if your possessions are protected from theft, even when traveling out of the U.S. or renting a car overseas. However, filing a claim on your own policy could cause your rates to rise, just like how they would with an auto insurance claim.

Your Credit Card Might Offer Car Rental Insurance Already

Don’t spend more money than you need to! Certain credit cards—mainly those for travel—offer coverage for rental cars. However, note that credit card benefits only cover Loss Damage Waivers or Collision Damage Waivers. Also, benefits depend on what card issuer you have, so do your research and check your benefits statement so you know if you’re protected.

Primary vs. Secondary Coverage

If you use rental protection through your credit card, be sure to check if your card offers primary coverage or secondary coverage. Primary is ideal, as filing a claim using your card won’t raise your premium or require you to meet your personal policy’s deductible. If it acts as secondary, know that filing a claim on your own policies, even in a rental car, could raise your premium.

Here’s what you need to know:

Primary coverage: Incredibly beneficial, but also incredibly rare, very few credit cards offer this type of protection. When it acts as your primary insurance, filing a claim this way won’t raise your premium because you can file directly through your credit card company before applying for reimbursement elsewhere, like a pre-existing insurance policy.

Secondary coverage: This coverage is helpful, but only after you get reimbursement or support from any other pre-existing insurance policies you might already have. The good news is that benefits from your credit card, even as a second resort, might reimburse you for any deductibles you owe on another policy after filing a rental car claim.

Long Story Short: You Should Have Rental Car Insurance

At the end of the day, no one wants to be stuck paying for unexpected costs, especially while on vacation or out of the country. If you find yourself driving a car that isn’t yours, make sure you’re covered so you’re not left with huge repair—or even replacement—bills. Car rental agencies offer four different types of coverage, but check to see if you already have protection elsewhere.

You might already have collision or liability coverage through your own car insurance policy! If you want the cheapest rates on quality coverage, Insurify works to help you compare quotes from hundreds of insurance companies in the market. Renting a car might be pricey, but your insurance coverage doesn’t have to be. In just a few minutes, you can get your free quote today.