If you are traveling without your vehicle or need temporary transportation after an accident, you may be in need of a rental vehicle. However, many drivers aren’t aware of whether their insurance policy covers the cost of a rental vehicle—or damages in case you get in an accident with one.
Some auto insurance policies extend to cover rental vehicles, but not all. It is important to speak with your insurance agent about your policy.
Examining Your Insurance Policy
When deciding whether or not your personal insurance will cover your rental car, there are a few different coverages you should have. If you answer yes to all of the following questions, you may not need to purchase additional coverage:
Do you have liability, collision or comprehensive car insurance?
Liability, collision and comprehensive insurance are the three main coverage options available when purchasing car insurance. Although it is not always required to purchase all three coverages, they can optimize your protection in the event of an accident.
Rental vehicles typically come with liability insurance, but don’t always include comprehensive and collision. This insurance may not be available for your rental vehicle if you do not already have it on your personal auto insurance policy.
Does your policy cover administrative fees, loss of use or towing charges?
It’s always a good idea to check see whether your insurance company pays for—or provides a rider for—additional fees associated with rental cars. This coverage can be helpful if a car you rent is lost, stolen or damaged.
Do you have a renters or homeowners policy that will cover your belongings if lost or damaged?
It is important to keep in mind that auto insurance doesn’t typically cover personal items inside your vehicle. Instead, your home insurance or renters insurance should cover your belongings in case they are damaged or stolen from your personal vehicle or rented vehicle.
What Is Rental Car Insurance and What Does It Cover?
Car rental companies provide additional coverage that is often used to supplement insurance you already possess.
Rental car agencies offer four different coverage options:
Supplemental liability insurance: Most car rental companies need to have the minimum amount of liability coverage required by the state, but oftentimes it isn’t an adequate amount of coverage. If you have a personal car insurance policy with a high liability limit, you may not need additional protection.
Loss damage waiver (LDW)/collision damage waiver (CDW): This waiver is a document that can alleviate your financial responsibility should your rental vehicle be damaged or stolen. This also includes loss of use coverage if the rental company charges you for the amount of time the car could not be used while being repaired, as well as other administrative fees the car rental agency assesses. The LDW may become void if the incident occurred from the driver of the rented vehicle exhibiting reckless behavior, speeding, under the influence of drugs or alcohol, or the vehicle being driven on unpaved roads.
Personal accident insurance: This will cover the driver and any passengers within the rented vehicle for any medical bills caused by a car crash. This coverage is useful if you do not already have health insurance or personal injury protection insurance.
Personal effects coverage: This covers any personal belongings that are stolen from the rental vehicle. If you already have renters or homeowners insurance, this may already be covered under your policy.
The coverages offered are often the same as what you already have for your personal car insurance. Speak with your insurance agent about not paying extra for coverage you already have on your personal auto insurance policy.
Is Rental Insurance Required?
Rental companies don’t always require auto insurance since their vehicles often come with liability. However, ensuring that your auto insurance policy covers a rental vehicle is crucial in case of an accident.
If you are traveling in a different country, though, requirements may be different. You could rent a vehicle in Mexico, for example, and have insurance already built into the rental agreement. The same rules apply as in America, however, meaning that you will only be eligible for the amount of auto insurance coverage as you already have on your personal auto insurance policy.
When in doubt, speak with your insurance provider about your policy and ensure that you will be covered even when driving a vehicle that is not your own.