Haris Ashley
Rented vehicle insurance is an optional add-on when renting a car. It covers you in the event of an accident or damage to the rental vehicle. This includes damage to or loss of the vehicle, personal liability, personal injury protection, and loss of personal property.
Rental car insurance is not mandatory, but it can provide peace of mind and limit your financial liability if something happens to the vehicle. The cost of rental car insurance varies depending on the company and the level of coverage chosen. It is important to carefully review the coverage provided by your personal auto insurance policy and credit card before deciding whether to purchase rental car insurance.
| Characteristics | Values |
|---|---|
| What it covers | Damage to or loss of the vehicle, personal liability, personal injury protection, loss of personal property |
| When to get it | When your personal auto insurance policy and credit card do not provide sufficient coverage |
| Cost | Typically starts at $30 per day |
| Alternative options | Primary coverage provided by personal auto insurance policy; secondary coverage provided by credit card used to rent the car |
What You'll Learn
Rental car insurance vs. your own auto insurance
Rental car insurance provides coverage while driving a rental car and can be obtained via your personal policy, rental car companies, or credit card benefits. You don't need to have your own auto insurance policy to rent a car, but it's important to understand the coverage options available to you and how they compare to your own auto insurance.
Rental car insurance options
When renting a car, you will typically be offered the following insurance options by the rental company:
- Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This is not an insurance product but a waiver that transfers financial responsibility from you to the rental car company in case of damage or theft. It covers "loss of use" fees charged by the rental company for the time the car is out of service, as well as administrative fees and towing charges. LDW/CDW is usually offered at a daily rate of around $30.
- Liability coverage: This covers other drivers' property damage and injuries resulting from an accident you cause.
- Personal accident insurance: This covers medical costs for you and your passengers, regardless of who is at fault.
- Personal effects coverage: This covers your personal items in case of theft.
Your own auto insurance policy
Your own auto insurance policy will often provide sufficient coverage for a rental car, especially if you have comprehensive and collision insurance. Here's how your own policy might compare to the rental car insurance options:
- LDW/CDW: If you have comprehensive and collision coverage on your own policy, it generally extends to a rental car within the US or Canada. However, you will still be responsible for your deductible, and filing a claim may raise your premium.
- Liability coverage: Your own liability insurance will typically cover you when driving rental cars within the US and Canada.
- Personal accident insurance: If you have personal injury protection or medical payments coverage through your auto policy, you likely won't need additional personal accident insurance.
- Personal effects coverage: A homeowners, renters, or condo policy usually covers your personal items, even when stolen from a rental car. However, you will need to meet your deductible.
Other options
In addition to your own auto insurance policy and the rental car company's offerings, there are a few other ways to obtain rental car insurance coverage:
- Credit card benefits: Many credit cards offer rental car insurance if you use the card to pay for the rental and decline additional coverage from the rental company. This can be primary coverage (handling all damages) or secondary coverage (kicking in after your other policies).
- Standalone policies: Some companies sell standalone rental car insurance policies, which can be cheaper than the rental company's offerings.
Whether or not you need rental car insurance depends on your situation. If you already have adequate auto insurance for personal vehicles and are travelling within your country, you may not need additional rental car insurance. However, if you're travelling abroad or for business purposes, you may need additional coverage. Additionally, if you want to avoid paying a deductible or dealing with potential rate increases on your auto insurance, purchasing rental car insurance could be a good idea.
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Loss-damage waiver (LDW)
LDW is also referred to as a collision damage waiver (CDW). This is because, in the event of a collision, the rental company surrenders its rights to charge the renter for damage to the car. This is with a few exceptions, such as tire damage or gross negligence.
LDW is often offered at a daily rate, with prices starting at $9 per day. LDW is not always necessary, as your auto insurance policy may already cover rental cars. It is important to check your policy before purchasing LDW.
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Personal accident insurance
If you're travelling overseas, where your health insurance may not be accepted, it's recommended that you carry travel insurance with emergency medical benefits and emergency transportation benefits. These benefits are broader than personal accident insurance as they can cover your medical expenses in an emergency, whether or not it was caused by a car accident.
In most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as you're using 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 important to note that your deductible will still apply if you file a claim with your insurer.
Additionally, liability insurance covers injuries or property damage you cause to others in a crash, up to your policy limits. Your own injuries and any damage to your rental car are not covered under liability insurance. If you only have the minimum liability coverage required by your state, purchasing additional coverage from the rental car company or a third-party insurer may be a good idea.
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Personal effects coverage
The cost of PEC varies, with some companies charging a flat rate per day, and others charging a percentage of the total rental cost. For example, Avis offers PEC at a rate of $2 per day, providing $600 of insurance coverage per person, up to a maximum of $1,800. However, PEC is often bundled with Personal Accident Insurance (PAI), which can bring the total extra cost to $5-$11 per day, plus taxes and fees.
It is important to note that PEC may duplicate your existing coverage. For example, if you have a homeowners, renters, or condo policy, your personal items may already be covered, even if they are stolen from a rental car. Therefore, it is recommended to examine your personal insurance policies before purchasing PEC, as you may already be adequately covered.
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Using your credit card for rental car coverage
Credit cards often provide rental car insurance coverage, but you must use the card to pay for the rental and the rental must be in your name. They can be particularly useful when travelling overseas, in places where your personal auto insurance won't cover you.
The two main types of coverage are primary and secondary. Primary coverage handles damages to the rental car regardless of other insurance policies, while secondary coverage only kicks in after your other policies, such as your personal auto policy. Both types usually cover rental vehicle damage, not liability. Make sure you have proper liability protection elsewhere.
If you're planning on relying on credit card coverage, call your credit card issuer to confirm the details.
What to ask your credit card issuer
- Is rental car coverage primary or secondary?
- How do I make sure coverage applies to my rental?
- What coverage is included?
- What vehicle rentals are excluded?
- How long will the rental be covered?
- What if I don't have personal auto insurance?
- How does coverage vary for international rentals?
- What is the procedure for filing a claim?
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Frequently asked questions
Rented vehicle insurance covers you when you rent a vehicle directly from a rental car company. When renting a car, you will be asked whether you want to add insurance to your rental or if you want to waive the insurance.
It depends. You want to make sure you and your rental vehicle are covered, but you also don't want to pay for unnecessary duplicate insurance coverages that could double the price of your rental.
The first step is to check your auto insurance policy to see what type of coverage for rental cars may already be included. The coverages you already carry on your personal vehicle, such as physical damage and liability coverages, typically extend to your rental car within the U.S.
