Car Insurance When Renting a Vehicle

You will be shocked at the additional taxes and fees you’ll have to pay when you rent a car. When you check out, you will be asked if you would like insurance on your rental car. If you’re not ready for this question, it may be a surprise. The rental agency agents can make it seem like you need insurance to protect yourself from thousands of dollars in case of an accident. Is this coverage something you really need or just an extra cost for the rental agency?

What is covered?

This question can be answered by understanding the policy’s coverage. While the exact coverage will vary from one rental company to another, there are generally some commonalities to these policies. There are four main types of coverage: personal accident insurance, loss waiver, personal injury insurance and personal effects insurance.

If your vehicle is involved in an accident, the loss damage waiver will cover you for any damage. It is not an insurance product as it doesn’t pay for the damage. It takes all responsibility for damage from you, the renter, even though you cause the accident. The damage to the vehicle will be covered by the rental company’s liability insurance. The waiver does not cover accidents that are caused by drunk driving, off-roading, speeding, etc. The waiver protects you from any charges incurred by the rental company for lost use while the vehicle is being repaired.

Because the law requires it, rental cars come standard with liability insurance. The protection provided is however minimal. Rental agencies offer liability insurance because most drivers require more coverage than the vehicle’s.

Personal accident insurance could cover you and your passengers if you are hurt in an automobile crash. It is relatively inexpensive to add this to your policy. You probably won’t need it if your health insurance covers you.

Personal effects coverage is the last type of coverage. It will cover any thefts of items you transport in your rental car. Remember that personal effects coverage is usually included in your renter’s or homeowner’s insurance policies.

Are You Required to Insure Your Car When Renting?

Make sure that you are really required to have the insurance policy for your car rental company. You may be able to get the same coverage from other insurance products that you have. Call your agent to find out the type of coverage that you have for renting a car before you leave on your trip. You are likely already covered for renting a car if you have comprehensive and collision coverage. If you have only liability coverage, it may be worth looking into the loss damage waiver for car rentals. If you damage the rental car, your agent can tell you if there is loss of use, towing and administrative costs.

Your credit card company is another place you can look for coverage. Reward programs are offered by many credit card companies and automatically cover rental cars that are rented with them. The coverage usually covers the vehicle only, and not the passengers or other drivers. This coverage may be combined with your existing insurance policy or health plan to provide the necessary coverage.