Rental Coverage: Using Auto Insurance Without An Accident

If you're renting a car, it's important to understand your insurance options before you get to the rental counter. You don't need your own auto insurance to rent a car, but you do need some type of coverage. If you're uninsured, you can either buy insurance from the rental company, use a credit card that offers rental car coverage, or buy car insurance for short-term use. If you do have auto insurance, it's worth checking with your agent to see what it covers when you drive a rental car. Policies differ, but some cover damage to the rental car from a wreck or theft. If you use your policy, you'll have to cover your deductible.

Rental car insurance vs rental car reimbursement

Rental car reimbursement coverage is an optional add-on to your auto insurance policy that helps pay for the cost of a rental car while your vehicle is being repaired after an accident. This type of coverage typically does not have a deductible, but it is important to note that it will only come into effect if your own insurer is paying for the repairs to your car. The cost of adding this coverage varies depending on the insurer, but it generally ranges from $2 to $15 per month.

Rental car reimbursement coverage is different from rental car insurance, which is a separate insurance policy that you purchase for a car that you rent. Rental car insurance can be covered under your regular auto policy, the rental car company's policy, or even your credit card's benefits. On the other hand, rental car reimbursement coverage must be added to your regular policy and is specifically for the cost of a rental vehicle.

Rental car reimbursement coverage usually has daily and total claim limits. For example, your insurer might offer a daily limit of $50 and a total limit of $1,500 per claim. This means they will reimburse you for up to $50 per day for your rental car, up to a maximum of $1,500. It's important to note that this coverage typically excludes fuel costs, security deposits, and any additional rental car insurance you may purchase from the rental company.

In contrast, rental car insurance provides coverage for the rental car itself and may include liability coverage, collision damage waivers, and other protections. This type of insurance can be purchased from the rental car company or may be included in the rental cost. It is important to carefully review the terms and conditions of rental car insurance to understand what is and is not covered.

In summary, rental car reimbursement coverage is an add-on to your existing auto insurance policy that helps cover the cost of a rental car while your vehicle is being repaired. On the other hand, rental car insurance is a separate policy that provides coverage for the rental vehicle itself and may include additional protections. Both options can provide valuable peace of mind, but it is important to understand the differences between them to make an informed decision about which type of coverage is right for your needs.

When is rental car insurance worth it?

Rental car insurance is worth it in certain situations. Firstly, if you don't have your own auto insurance, you will need to buy insurance from the rental company or use a credit card that offers rental car coverage. If you do have auto insurance, your policy will likely cover rental cars for personal use, but it's important to check with your insurer to confirm. Some policies may not cover rental cars, and business use of a rental car may not be included.

Even if you have auto insurance, there are situations in which purchasing rental car insurance could be beneficial:

• If your personal auto insurance policy has a high deductible, the cost of rental car insurance may be lower.
• If you want to avoid filing an insurance claim and potentially increasing your insurance premiums, rental car insurance can provide peace of mind.
• If you don't have collision or comprehensive coverage on your personal vehicle, you will be responsible for all costs if the rental is damaged or stolen, unless you purchase additional coverage.
• If you have minimal liability coverage, increasing your coverage with rental car insurance can be beneficial when driving in unfamiliar territory.
• If the rental car is worth more than your personal car, your existing insurance may not be sufficient.
• If you plan to drive the rental car outside of the US or Canada, as personal car insurance policies typically don't extend beyond these areas.
• If your home or renters insurance doesn't cover personal belongings stolen from your car, personal effects coverage offered by rental companies can be useful.

Additionally, if you don't own a car but frequently rent vehicles, purchasing short-term or non-owner car insurance might be more cost-effective than constantly buying rental car insurance.

Does my credit card provide rental car insurance?

Many credit cards offer rental car insurance, but it's important to understand the extent of the coverage and any exclusions that may apply. Here's what you need to know:

• Check your credit card agreement or call the number on the back of your card to confirm if it offers rental car insurance. Get the details in writing so you know exactly what's covered.
• Credit card rental insurance typically provides secondary coverage, which means it kicks in after your personal auto insurance pays. It can help cover your auto insurance deductible and other costs not covered by your primary insurance.
• Some cards offer primary rental car coverage, which means it pays out first, and you don't have to involve your auto insurance. Examples of cards with primary coverage include the Chase Sapphire Preferred® Card, the Chase Sapphire Reserve®, and the Capital One Venture X Rewards Credit Card.
• Credit card rental insurance usually covers collision damage or theft of the rental car, similar to collision and comprehensive insurance. However, it generally does not cover liability, personal belongings, medical expenses, or personal injury.
• The coverage period for credit card rental insurance is typically limited, ranging from 15 to 31 consecutive days, depending on the card and whether you're renting domestically or internationally.
• Certain types of vehicles, such as exotic cars, motorcycles, trucks, and large vans, may be excluded from credit card rental insurance.
• Credit card rental insurance may not apply if you don't pay for the entire rental with the same card or if you accept the rental company's collision coverage.
• If you don't have personal auto insurance or your policy has a high deductible, credit card rental insurance can provide valuable protection.
• Even if your personal auto insurance covers rental cars, using a credit card with rental insurance may save you money by covering your deductible or additional fees.
• When renting a car, it's important to understand the coverage provided by your auto insurance, credit card, or other policies to make an informed decision about purchasing additional rental car insurance.

What types of insurance are needed for rental cars?

Rental car insurance is not always necessary, but it can provide additional protection in certain situations. Here are the types of insurance you may need for a rental car:

• Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW): This type of coverage is offered by rental car companies and protects you from financial responsibility if your rental car is damaged, stolen, or vandalised. It usually includes a deductible, and the daily fee can range from $10 to $30.
• Supplemental Liability Protection: This insurance covers bodily injuries or damage caused to other vehicles or property. It increases your liability coverage and can provide protection against uninsured or underinsured drivers.
• Personal Accident Insurance: This type of coverage pays for medical expenses, including ambulance transport and hospital care, for you and your passengers if injured in an accident while in the rental car. It may also provide benefits in the event of accidental death.
• Personal Effects Coverage: This optional coverage reimburses you and your travel companions for stolen or damaged personal items and luggage while in the rental car. It typically costs between $1 and $6 per day.

In some cases, you may already have sufficient coverage through your personal auto insurance, health insurance, or credit card benefits. It's important to review your existing policies and understand their terms and limitations before deciding whether to purchase additional rental car insurance.

What are the insurance limits and deductibles?

When it comes to insurance limits and deductibles, it's important to understand the key terms involved.

The premium is the price you pay for insurance. This is usually paid monthly, quarterly, semi-annually, or annually. If you want continuous coverage, you must pay your premium on time. The premium amount is influenced by several factors, including the type of insurance, the amount of coverage, the policy limits, the deductible, additional coverage, your insurance history, location, revenue, assets, and more.

Policy limits, or the limit of liability, refer to the maximum amount your insurance will pay out in the event of a covered loss. These limits depend on the type of insurance and the amount of coverage you've purchased. For general liability and professional liability insurance, there are per-occurrence limits and aggregate limits. Per-occurrence limits refer to the maximum payout for a single incident, while aggregate limits refer to the total payout for all claims during the policy period.

The deductible is the amount you are responsible for paying when a covered loss occurs. For example, if you have a $1000 deductible and $2000 in covered damages, you pay the first $1000, and your insurance covers the remaining $1000. Collision and comprehensive coverage are the most common types of coverage with deductibles. There are no deductibles for liability insurance, which covers the other person when you cause an accident.

When it comes to rental cars, your personal auto insurance policy typically extends to rental cars for personal use, with the same coverage limits and deductibles. However, it's important to note that personal auto insurance usually doesn't cover the rental company's "loss of use" fee, which is charged for the lost income while the rental car is being repaired. Therefore, it's crucial to understand the limits and deductibles of your insurance policy and how they apply to rental cars.

Frequently asked questions