Full Coverage Auto Insurance: Does It Cover Your Rental?

If you have full coverage auto insurance, you may be wondering if it covers rental cars. The answer is yes, in most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as you use it for personal purposes. This includes comprehensive and collision insurance, which will cover you in case of damage to the rental car, as well as liability insurance, which pays for injuries or property damage you cause to others in a crash. However, it's important to note that your own injuries and any damage to your rental car may not be covered by your full coverage auto insurance. Additionally, your policy might not cover rental cars in certain situations, such as if you're renting a luxury vehicle or using the rental car for business purposes. Therefore, it's always a good idea to review your policy and confirm with your insurer before renting a car.

Liability insurance

It is worth noting that the coverage limits and deductibles of your personal auto insurance policy will typically apply to the rental car as well. Therefore, it is crucial to review your policy and understand the extent of your liability coverage before renting a car. Additionally, personal auto insurance usually only covers rental cars for personal use, excluding business use.

When deciding whether to purchase additional rental car insurance, consider the coverage provided by your personal auto insurance policy. If your policy has low liability limits, purchasing additional liability coverage from the rental company or opting for a "supplemental liability insurance" policy may be beneficial. This additional coverage can provide extra protection in case of an accident with a high-end vehicle or when travelling abroad, as U.S. insurers typically only provide coverage within the U.S. and Canada.

In summary, liability insurance for rental cars is an important consideration, and it is recommended to review your personal auto insurance policy and make necessary adjustments or purchase additional coverage to ensure adequate protection while driving a rental vehicle.

Collision and comprehensive insurance

Collision insurance covers damage to your vehicle in the event of a collision with another vehicle or object, such as a tree or telephone pole. It also covers damage caused by potholes. If your car is damaged in an accident, collision insurance will help pay the costs of repairing or replacing it, minus your deductible.

Comprehensive insurance, on the other hand, covers damage to your vehicle caused by events other than collisions. This includes damage caused by natural disasters, theft, vandalism, fire, or falling objects. It also covers contact with animals and theft of car parts. Comprehensive insurance is significantly cheaper than collision insurance, costing on average about $134 per year.

Both types of insurance are beneficial if you want to protect yourself financially in case of unexpected events. Collision insurance is particularly useful if you are a safe driver surrounded by unsafe drivers, while comprehensive insurance is a good idea if you live in an area with hazardous road conditions or a high crime rate.

It is important to note that collision and comprehensive insurance only cover damage to your own vehicle. If you want coverage for property damage or injuries caused to others in an accident, you will need liability insurance.

Personal injury protection (PIP) and medical payments (MedPay)

Personal Injury Protection (PIP)

PIP is mandatory in 12 no-fault states and optional in seven others. It covers the policyholder, family members living in the household, any driver with permission to drive the covered vehicle, and passengers. PIP provides financial protection for a range of expenses, including medical costs, lost income, childcare, household expenses, survivors' loss, and funeral expenses. The coverage limits vary by state, ranging from $2,500 per person to unlimited medical expenses and permanent injury benefits of up to $250,000. One of the advantages of PIP is its comprehensive nature, ensuring protection from various financial burdens after an accident. However, it does not compensate for pain and suffering.

Medical Payments (MedPay)

MedPay is an optional supplement to car insurance policies and is not available in all states. It covers 'reasonable and necessary' medical expenses for the insured and other individuals affected by a car accident, regardless of who is at fault. MedPay can serve as primary medical insurance or as a supplement to existing health insurance coverage. It typically has a lower payout limit, ranging from $5,000 to $10,000, and does not cover lost wages or essential services for unemployed individuals. Unlike PIP, MedPay allows insurance companies to seek reimbursement from the at-fault party's insurance company.

PIP vs. MedPay

While both cover medical expenses, PIP provides more comprehensive coverage and is mandatory in no-fault states. MedPay, on the other hand, is optional and has a narrower scope, specifically covering medical expenses. PIP also covers additional costs such as lost wages, childcare, and funeral expenses. MedPay, however, has advantages such as quicker payout and no deductible or co-pay.

Loss-damage waiver (LDW)

In some contracts, the renter may be able to choose either a full damage waiver or one that holds the renter responsible for damage only over a certain specified amount, which is like an inverse deductible.

If you accept full LDW, the rental company assumes responsibility for the loss of or damage to the car, except, if permitted by law, for lost, damaged or stolen keys or remote entry devices, towing or tire services, unless related to an accident, or recovery of the car if stolen (except in the state of Alaska) and except for your amount of "responsibility", if any, specified on the rental document.

If you do not accept LDW, you will be responsible for all loss or damage to the car. You should examine your personal auto insurance policy or credit card, including the deductible and limit of coverage, because it may cover loss or damage and personal injury incurred while you are using or operating a rental car.

In Canada, if you select LDW and your rental vehicle is damaged or becomes a lost, you may incur a deductible due to the loss or damage. This varies, based on the type of vehicle you rented, and will be specified in your rental agreement. Currently, this amount ranges from CDN$300 to CDN$5,000.

In the US, the laws of certain states mandate that a personal automobile insurance policy must cover the rental of a motor vehicle against damage to the vehicle and against loss of use of the vehicle. Therefore, the purchase of any loss damage waiver or insurance for the risk of possible loss or damage to the car covered by the agreement is not necessary if your policy was issued in one of these states. You should check your personal automobile insurance policy to review if the purchase of LDW would be duplicative of coverage afforded under your personal automobile insurance policy.

Credit card coverage

Many credit cards offer rental car coverage if you use the card to pay for the rental. This could include reimbursing you for your car insurance deductible if you make a claim or paying for the entire cash value of the vehicle if it is totalled. However, this depends on the type of coverage your card offers.

There are two types of credit card rental coverage: primary and secondary. Primary coverage means your credit card will pay out a claim first, and you won't need to involve your car insurance company or pay a deductible. Secondary coverage, the more common type, means your credit card will only pay the amount not covered by your car insurance policy. However, your credit card company might reimburse you for your deductible and other fees, such as towing charges and loss of use.

Credit card rental coverage has several requirements:

• You must pay for the rental in full with the card.
• You must decline the rental car company's CDW or LDW at the counter.
• The driver must be listed on the rental agreement.
• Specific countries and vehicles may be excluded.

If you're unsure what coverage your credit card offers, check your card's benefits guide or call the phone number on the back of your card.

Frequently asked questions