When renting a car, car rental companies usually ask whether you want to purchase insurance through them. Although purchasing this policy might seem beneficial, it’s also essential that you understand exactly what coverage it provides.
Your personal auto insurance should typically provide cover for rental cars; however, there may be exceptions.
Liability Coverage
Renting a car usually includes additional insurance policies from the rental company. These often include liability coverage to protect you if you cause bodily injury to others while driving the rental car, though your regular auto policy should already provide this. In many states it is required that drivers maintain minimum amounts of liability coverage.
Collision and comprehensive coverage may also be included as part of a supplemental protection package, and is meant to pay for repairs or replacement after accidents or other types of damage occur. It’s important to keep in mind, however, that filing collision and comprehensive claims on a rental car could raise its insurance rates when purchased outright, so purchasing such policies might not be wise.
Personal accident insurance is another supplemental form of protection offered at rental car counters, providing medical expenses coverage if an accident happens while driving the rental car. You can purchase this coverage independently through short-term car policies or have it already through other forms of coverage such as health or homeowners policies.
There are also a number of credit cards that offer rental car coverage as a benefit of using them to rent cars, offering cheaper policies than standalone ones but may not offer as comprehensive of coverage. Before opting for standalone coverage, first check with your card issuer if their coverage meets your needs or use one of WalletHub’s picks for best credit cards with rental car insurance – that way, you can avoid additional expenses related to purchasing additional policies and instead save money when planning your vacation! Happy driving!
Collision Coverage
Collision coverage, often included as part of a full car insurance policy that also provides liability and comprehensive protection, pays for damage to your own vehicle regardless of who caused an accident. This distinguishes collision from liability coverage which covers medical costs or damages sustained from accidents you caused through which others’ property was damaged as a result.
Your collision coverage limit should reflect the value of your vehicle, while choosing an acceptable deductible is also key – this amount must be paid out-of-pocket before your car insurance company begins covering repairs (up to your policy limits). While collision insurance tends to have higher premiums than other forms of auto coverage, it could prove worthwhile in case an accident damages it significantly.
Not only could collision coverage help replace your own vehicle, but many lenders or leasing companies require it as part of the lease or loan agreement. By including comprehensive and collision coverage in both agreements, car leasing/financing companies protect their financial investment should you ever declare total vehicle loss through an accident.
Your auto insurance may cover rental cars as well, so check with your agent. Most policies provide collision and comprehensive coverage; thus allowing you to avoid purchasing the Loss Damage Waiver offered by rental agencies.
Though your lender or leasing company likely requires collision and comprehensive coverage, most states do not mandate this type of insurance coverage. Still, it may be wise to purchase this type of protection for newer vehicles which would be costly to repair or replace following an accident; also having clean driving records will help secure lower rates on such policies.
Comprehensive Coverage
As long as your personal auto policy includes comprehensive and collision coverage, it should also extend to rental cars in the US. If your own car has full coverage, additional liability insurance may not be necessary (although you should always consult your RamseyTrusted local expert prior to making any decisions).
Liability insurance covers lawsuit-related costs if an accident that damages other people’s vehicles or property occurs due to your fault. Costs vary by rental car company, typically costing $12-$30 daily and mandated by New York State law for this optional protection that usually has higher limits than your standard auto policy.
If you are uncertain if your own car insurance covers rentals, it would be prudent to contact your provider prior to heading for the rental desk. Your local RamseyTrusted professional would be more than happy to review and amend as necessary.
Collision and comprehensive coverage fall under a larger umbrella known as full coverage, which protects against natural disasters, vandalism and other unexpected events. Most policies offer rental car coverage as well; upon renting you will typically receive either a collision damage waiver (CDW) and/or loss-damage waiver (LDW). A CDW waives your financial responsibility in cases of theft of or damage to the rental car but doesn’t cover its deductible; while LDW protects against theft, environmental damage and other incidents. Both types of coverage can be obtained separately through third-party providers or by purchasing standalone rental car policies from providers; more details on this topic here.
Rental car insurance policies may be worthwhile investments unless your own auto policy doesn’t already provide such protection. Such policies can save money in the long run by helping protect against collision or other damage to rental cars, providing peace of mind while travelling for business or pleasure.
Uninsured/Underinsured Motorist Coverage
Even though almost all states mandate car insurance for motorists, a number of drivers remain on the roads without coverage. According to the Insurance Research Council, approximately one out of eight drivers is uninsured – which means if an accident were to happen with one of them, you could end up covering much of their medical and property damage bills yourself; adding uninsured/underinsured motorist coverage into your policy could provide peace of mind in case this happened.
In most instances, the other driver’s insurance will pay to repair your vehicle and cover any injuries sustained from an accident. But if they either don’t have any coverage at all or they only have inadequate amounts available to cover you adequately, uninsured/underinsured coverage must also be added – also known as bodily injury and property damage protection or UIM in many states and add-on policies available elsewhere – so as to be protected in case someone doesn’t.
As well as liability coverage, UM/UIM coverage provides protection in case a driver flees after hitting you or doesn’t carry enough liability coverage to cover all expenses after an accident. Typically you can choose the same limits for both policies to maximize protection in this way.
If you already have health insurance, this might not be as much of a worry since this policy typically covers medical bills. If this coverage is insufficient or the other driver doesn’t carry enough, UM/UIM coverage can help cover medical bills owed.
UM/UIM coverage protects you and your family in situations when another driver doesn’t carry enough auto insurance, and acts as a safeguard against irresponsible drivers on the road who don’t take their responsibilities seriously. While this coverage shouldn’t replace health coverage plans entirely, but instead act as an add-on. Therefore it is wise to have sufficient health coverage beyond UM/UIM to pay any medical bills not covered by its coverage.
