Auto Insurance And Rentals: What's The Coverage?

If you're renting a car, it's important to understand your insurance options before you get to the rental counter. In most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as you use it for personal purposes. For example, if you have comprehensive and collision insurance, your rental car will likely be covered if it's damaged, stolen, or totaled, as long as the rental is of similar value to your own vehicle. However, it's always a good idea to review your personal auto coverages before renting a car to ensure you have sufficient coverage.

Liability insurance

If you don't have your own car insurance, you will need to purchase liability coverage through the rental company. This is also true if you only have the minimum required coverage, as state minimums typically have low liability limits.

If you have a low liability coverage limit, you can also purchase supplemental liability protection (SLP) from the rental company, which will provide additional coverage in the event of an at-fault accident. SLP policies from Alamo and Enterprise, for example, provide up to $300,000 in liability coverage, while Hertz provides up to $1 million in most states and up to $2 million in California and Florida.

Credit cards may also provide rental car liability insurance if you use the card to pay for the rental. However, this type of coverage is usually secondary, meaning it will only pay out after your auto insurance policy.

Collision insurance

When to Consider Collision Insurance

If you already have a personal auto insurance policy with comprehensive and collision coverage, it usually extends to rental cars as well. However, it's important to confirm this with your insurance provider before assuming you're covered. Additionally, some policies may have exclusions or limitations for rental vehicles, so reviewing your specific policy is crucial.

If you don't have collision coverage on your personal auto insurance, consider purchasing a collision damage waiver (CDW) or loss damage waiver (LDW) from the rental car company. This waiver is not technically insurance but relieves you of financial responsibility for damage to the rental car. It's important to note that these waivers often include a deductible, and there may be exclusions for certain types of damage or risky behaviours.

Credit Card Coverage

In some cases, your credit card company may offer collision insurance for rental cars if you use their card to pay for the rental. This coverage is typically secondary, meaning your personal auto insurance will be the primary source of coverage. However, it's important to review the specific terms and conditions of your credit card coverage before relying on it.

International Travel

If you're planning to rent a car internationally, pay close attention to the coverage provided by your personal auto insurance and credit card. U.S. auto insurance policies often don't provide coverage abroad, so you may need to purchase additional insurance from the rental car company or a third-party provider.

Deductibles and Claim Implications

When considering collision insurance for a rental car, it's important to understand the implications for deductibles and future insurance rates. Collision insurance may come with a deductible, which is a predetermined amount you have to pay out of pocket before the insurance coverage kicks in. Additionally, filing a claim under your collision insurance could potentially result in increased insurance rates or premiums.

In summary, collision insurance for rental cars provides financial protection in case of accidents or damage to the vehicle. It's important to review your personal auto insurance policy, understand the coverage offered by your credit card, and be aware of any exclusions or limitations, especially when travelling internationally. By making informed decisions about collision insurance, you can ensure you have the appropriate coverage while avoiding unnecessary costs.

Comprehensive insurance

If you have comprehensive insurance on your personal vehicle, it will usually extend to a rental car. However, it will not cover the cost of a rental car if your usual vehicle is unusable. For that, you would need rental reimbursement coverage.

It's important to note that comprehensive insurance does not cover business use of a rental car. If you are renting a car for business purposes, you may need to purchase additional insurance.

Personal accident insurance

The cost of personal accident insurance varies, but it can be as low as $7 per day. The standard level of coverage for accidental driver death is between $100,000 and $200,000, and for accidental passenger death, it is between $175,000 and $25,000.

If you already have personal injury protection through your auto insurance, you may not need to purchase personal accident insurance from the rental company. Additionally, if you are travelling within the US, your health insurance policy may cover your medical expenses in the event of an accident.

If you or a passenger are injured while driving the rental vehicle, you will need to contact the rental company's insurer directly to place a claim. This will normally involve filling out a claims form and providing details of your insurance, the premium you paid, and invoices for your medical costs. In the case of death, the next of kin can place the claim.

Personal effects coverage

However, PEC may duplicate your existing coverage. If you have renters or homeowners insurance, your personal belongings are typically already covered, even when they are stolen from a rental car. Therefore, it is important to examine your personal insurance policies before purchasing PEC.

Frequently asked questions