Rental Driving: Insurance Must-Haves

Should I Carry My Insurance When Driving a Rental Car?

If you already have car insurance, you may not need to purchase additional insurance for a rental car. However, it's important to review your personal auto insurance policy before renting a car, as there may be situations where adding rental car insurance is beneficial. Rental car insurance can provide coverage for damage to the rental vehicle, liability for accidents, and protection for your personal belongings.

In most cases, your auto insurance policy will provide similar coverage for a rental car as long as it is used for personal purposes. For example, if you have comprehensive and collision insurance, your rental car will likely be covered for damage, theft, or total loss. Your liability coverage will also apply when driving a rental car. However, it's important to note that your personal auto insurance may not cover rental cars for business use.

If you don't have car insurance, you will need to purchase liability coverage through the rental car company. Additionally, if you have high deductibles on your auto policy or want to avoid claims on your auto policy, purchasing rental car insurance could be a good option.

Another option for coverage is to use a credit card that offers rental car insurance. Some credit cards provide primary coverage, meaning they will pay out a claim first, while others offer secondary coverage, which pays out after your auto insurance. It's important to check with your credit card company to understand the specific coverage, rules, and restrictions.

Before renting a car, it's important to review your personal auto insurance policy and consider your options for additional coverage to ensure you have the protection you need.

Rental car insurance vs. your own auto insurance

Rental car insurance is an optional coverage offered by rental car companies to protect you in case of damage to or theft of the rental vehicle. This insurance is separate from your own auto insurance policy and is typically offered at the rental counter when you pick up your car.

Rental car insurance typically includes:

• Liability coverage: This covers damages or injuries you cause to others while driving the rental car.
• Loss/collision damage waiver: This releases you from responsibility for damage to the rental car, including theft and vandalism.
• Personal accident insurance: This covers injuries to you and your passengers while driving the rental car.
• Personal effects coverage: This covers your personal items if they are stolen from the rental car.

If you already have your own auto insurance policy, you may not need to purchase rental car insurance. In most cases, your personal auto insurance policy will provide similar coverage for a rental car as it does for your own vehicle. However, there are a few situations in which purchasing rental car insurance may be beneficial:

• You have high deductibles on your auto policy: Rental car insurance often has lower or no deductibles, which could save you money if you need to make a claim.
• You want to avoid claims on your auto policy: Filing a claim with the rental car company may help you avoid a rate increase on your personal auto policy.
• You don't have comprehensive or collision coverage: If your personal auto policy doesn't include comprehensive or collision coverage, adding a loss/collision damage waiver to your rental can protect you from physical damage to the rental car.
• You have low liability coverage limits: If you only have the state minimum liability coverage, purchasing additional coverage from the rental company can provide greater protection in the event of an accident.
• You're travelling internationally: Most US auto insurance policies only provide coverage in the US and Canada. If you're travelling to a country where your auto policy doesn't provide coverage, rental car insurance may be essential.

However, it's important to review your personal auto insurance policy before renting a car to understand what coverage, if any, will extend to a rental vehicle. Additionally, if you have a credit card that offers rental car insurance, you may already be covered without needing to purchase additional insurance from the rental company.

When do you need rental car insurance?

You may need rental car insurance if you want to be covered for certain situations that your existing insurance doesn't cover.

• You have a high deductible on your auto policy: Rental car insurance coverage often carries no or low deductibles, so you could pay much less or nothing out of pocket on a claim compared to a high deductible with your personal auto policy.
• You want to avoid claims on your auto policy: With rental car insurance, you would file a claim with the rental car company, which avoids a potential rate increase on your personal auto policy.
• You don't carry comprehensive or collision coverage: If you don't carry comprehensive or collision coverage on your personal auto policy, adding a loss-damage waiver can protect you against physical damage to your rental car.
• You carry a low liability coverage limit: If you carry the state minimum liability limit on your auto policy, adding additional coverage from the rental company will offer greater protection if you're involved in an at-fault accident.
• You're travelling: Most US auto policies only provide coverage in the US and Canada. If you're travelling to a country where your auto policy doesn't provide coverage, then rental car insurance may be essential.
• Your personal auto insurance doesn't cover rental cars: Some personal car insurance policies won't cover rental cars. Check with your insurer to confirm your policy covers rental cars before you head to the rental car office.
• You don't have auto insurance: If you don't have auto insurance, you will need to purchase liability coverage through the rental car company.
• You have no other means of coverage: If you don't have a credit card that can supplement your personal auto insurance, you may need rental car insurance.

When is rental car insurance not needed?

Rental car insurance is not needed in several situations. If you already have car insurance for a personal vehicle, you are likely covered when renting a car for personal use. Your personal coverage limits and deductibles will apply. However, if you are renting a car for business purposes, your personal auto insurance policy may not cover it, and you may need to get rental car insurance or check if your company has a commercial auto policy.

Additionally, if you have a credit card that offers rental car coverage, you may not need to purchase rental car insurance. Credit cards often provide primary or secondary rental car insurance if you use the card to pay for the rental. Primary coverage handles the entire claim, while secondary coverage pays the amount not covered by your car insurance policy.

Furthermore, if you have a homeowners, renters, or condo insurance policy, your personal belongings are typically covered even when travelling out of the country. This means that personal effects coverage offered by rental car companies may be unnecessary.

Lastly, if you are travelling within the US or Canada and your auto policy provides sufficient coverage, you may not need rental car insurance. However, if you are travelling to a country where your auto policy does not provide coverage, rental car insurance may be essential.

What types of rental car insurance are there?

There are four main types of rental car insurance: those that protect the rental car, third-party insurance, personal insurance, and roadside assistance.

Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW)

This type of insurance covers damage to the rental car, including theft and scratches caused by accidents. The LDW or CDW waives your financial responsibility for the rental car if it’s lost or damaged, as long as you abide by your rental agreement.

Supplemental Liability Insurance (SLI) or Third-Party Liability Insurance

This covers personal and material damage caused to other people’s cars, property, and even medical expenses.

Personal Accident Insurance (PAI)

This covers medical, ambulance, and death benefits for the driver and passengers in the rental car.

Personal Effects Coverage (PEC)

This covers the theft of possessions from the rental car, up to a set dollar limit.

Other types of rental car insurance include roadside assistance and roadside plus, which are optional services that can be purchased when renting a car.

How to save money on rental car insurance

If you already have car insurance, you may be covered for rental cars, so it's worth checking with your insurer. If you don't have car insurance, you may want to consider purchasing rental car insurance, especially if you're travelling to a country where your personal auto policy doesn't provide coverage. Here are some ways to save money on rental car insurance:

• Book early: Booking in advance can help you secure a great price, especially during peak travel season.
• Avoid booking at airports: Booking a rental car at the airport can be more expensive due to added surcharges and taxes. Instead, consider booking your rental car from a location in the city, which can often be cheaper.
• Use a credit card that covers primary insurance: Some credit cards offer primary rental car insurance as a perk. This can save you money on rental car insurance, but be sure to check with your credit card company to understand the coverage offered.
• Utilise memberships: Memberships with companies like Costco or BJ's Wholesale often come with partnerships and discounts with major rental car companies. Similarly, signing up for AAA can save you up to 20% on Hertz rentals, waive under-25 fees, and provide other benefits.
• Book through discount sites: Sites like Autoslash allow you to compare prices and factor in discounts from memberships, helping you find the best deal.
• Be cautious of bundle deals: Packages that include a "free" rental car may not always be the best deal. Sometimes, these deals can end up costing more due to additional fees and limited mileage.
• Take photos before driving off: Document any existing dents, scratches, or cosmetic flaws in the rental car before driving off. This can help protect you from being charged for pre-existing damage.
• Bring your own child car seat: Rental car companies often charge a daily fee for child car seats, so bringing your own or purchasing an affordable one at your destination can save you money.
• Pay tolls in cash: Rental car companies may charge a convenience fee for using their toll transponders. Paying tolls in cash or using your own toll transponder can help you avoid these extra fees.
• Shop around for insurance: Compare prices and coverage options from different insurance providers to find the best deal. You can also ask your current insurer about any available discounts, such as those for maintaining a good driving record or setting up automatic payments.

Frequently asked questions