Auto Insurance: What Extra Rental Car Fees Are Covered?

If you're renting a car, it's important to understand your rental car insurance options before you get to the rental car counter. You may already have rental car insurance coverage through your personal auto insurance, a credit card used to book the rental, or other insurance policies.

Rental car insurance is not the same as rental car reimbursement coverage, a standard add-on policy offered by most insurance companies that covers the cost of a rental car if your vehicle is being repaired as part of a claim.

There are four types of rental car insurance options that you could be offered through your rental agency: a loss damage waiver, liability coverage, personal accident insurance, and personal effects coverage.

Auto insurance covers rental costs after a qualifying claim is filed and approved

Auto insurance will cover rental costs after a qualifying claim is filed and approved. However, you must already have rental reimbursement coverage as part of your policy before the incident occurs for this to apply. If you are not at fault, the other driver's property damage liability insurance will likely cover the cost of your rental car while your vehicle is being repaired.

Rental reimbursement insurance is designed to cover the cost of renting a car following an accident or another type of covered claim. It's important to note that this coverage is not always applicable. For example, if your car breaks down due to a mechanical defect, rental reimbursement will not cover the cost of a rental.

Rental reimbursement works similarly to other types of insurance claims. You will need to purchase an endorsement for rental reimbursement and file a claim with your insurance company. Your insurer will then extend coverage up to your coverage limits. These limits could be a total amount, such as $900, or a set amount per day, such as $30, up to a maximum of $900.

When renting a car, it's important to understand your rental car insurance options. In most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as it is used for personal purposes. However, if you are renting a car for business purposes, your personal auto insurance policy may not cover it. It's always best to check with your insurer to confirm your coverage before renting a car.

Some other instances where rental car expenses are typically not covered by auto insurance include:

• Vacation rentals: If you are travelling out of town and want to rent a car, you will usually need to pay rental fees out of pocket, regardless of whether your trip is for business or pleasure.
• Mechanical breakdown: Rental reimbursement coverage does not apply if your car is out of commission due to a mechanical issue; it only covers rental car costs if your car is out of commission due to a covered loss.
• Routine maintenance: Auto insurance does not cover rental car costs if your car is in the shop for standard maintenance.

Auto insurance doesn't cover rental costs if the policyholder doesn't have rental reimbursement coverage

Auto insurance does not cover rental costs if the policyholder does not have rental reimbursement coverage. Rental reimbursement coverage is an add-on to your insurance policy that covers the cost of renting a car following an accident or another type of covered claim. This means that if your car is being repaired after an accident, rental reimbursement coverage will cover the cost of a rental car up to a certain amount per day or a total amount.

However, it's important to note that rental reimbursement coverage typically only applies if the accident was your fault. If the accident was not your fault, the other driver's property damage liability insurance will likely cover the cost of your rental car.

In addition, rental reimbursement coverage usually does not apply if your car breaks down due to a mechanical defect or routine maintenance. In these cases, you will be responsible for the cost of renting a car.

While rental reimbursement coverage is not standard on all car insurance policies, many insurance providers offer it as an add-on or supplemental coverage. It is generally recommended that drivers consider adding this coverage, as it can provide valuable peace of mind and help cut costs in the event of an accident.

It's also worth noting that, in most cases, your auto insurance policy will provide equivalent coverage for a rental car as long as you use it for personal purposes. However, this coverage may not extend to business use or rental cars outside of the US or Canada.

Rental car insurance covers liability, loss damage waiver, personal accident, and personal effects

Rental car insurance is not the same as rental car reimbursement coverage, which is a common auto policy option that covers the cost of a car rental if your vehicle is being repaired following a claim.

Liability Insurance

Liability insurance covers injuries and property damage caused to others in a crash and is required in most states. Your liability coverage will apply when driving a rental car, but only up to the policy limits. For example, if you have a policy limit of $100,000 for bodily injury per person, the rental car insurance will only cover up to that amount.

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

The LDW or CDW releases you from responsibility for damage to the rental car, including theft and vandalism. This type of coverage typically costs around $9 to $19 per day in the US. If you have collision and comprehensive coverage on your personal auto insurance policy, you can usually decline this waiver. However, it's important to check that your policy covers the full value of the rental car and includes loss-of-use coverage.

Personal Accident Insurance

Personal accident insurance covers medical costs for you and your passengers if you're involved in an accident while driving a rental car. This includes ambulance fees, medical care, and death benefits. If you have personal injury protection or medical payments coverage through your auto policy, or if you have adequate health insurance, you may not need personal accident insurance.

Personal Effects Coverage

Personal effects coverage insures your personal belongings if they are stolen from the rental car, up to a set dollar amount. However, this may be covered by your homeowners or renters insurance policy, so it's important to review your policies before purchasing this coverage.

It's worth noting that rental car insurance may overlap with your personal auto insurance policy, so it's important to review your personal coverages before purchasing rental car insurance. Additionally, some credit cards offer supplemental rental car insurance if you use the card to pay for the rental.

You should buy rental insurance if you only have liability insurance, if you have high deductibles, or if you're an at-risk driver

Should you buy rental insurance?

Rental insurance is not always necessary, but it is a good idea in certain situations. Here are some reasons why you should consider purchasing rental insurance:

You only have liability insurance:

If you only have liability insurance on your car, it is a good idea to buy rental insurance. Liability insurance covers injuries and property damage caused to others, but it does not cover damage to your own rental car. So, if you are renting a car and only have liability insurance, purchasing rental insurance can provide additional protection in case of an accident.

You have high deductibles:

If you have a high deductible on your personal auto insurance policy, buying rental insurance can help reduce your financial risk. In the event of an accident with the rental car, you will be responsible for paying the deductible before your insurance coverage kicks in. Rental insurance can help cover some of these costs.

You are an at-risk driver:

If you have a history of accidents or moving violations, you may be considered an at-risk driver. In this case, buying rental insurance can provide extra protection and peace of mind. At-risk drivers often have higher insurance premiums and may be subject to additional fees or surcharges. By purchasing rental insurance, you can help offset some of these costs and protect yourself financially in the event of an accident.

While rental insurance can provide valuable protection, it is important to note that it may not be necessary for everyone. Before purchasing rental insurance, review your existing auto insurance policy to understand what coverage you already have. In some cases, your personal auto insurance may already provide sufficient coverage for rental cars, making additional rental insurance unnecessary. Additionally, some credit cards also offer rental car coverage as a perk, so it is worth checking if this is included with your card.

The types of rental car insurance include liability coverage, loss damage waiver, personal accident insurance, and personal effects coverage

Rental car insurance is not the same as rental car reimbursement coverage, which is a standard add-on policy offered by most insurance companies. This covers the cost of a rental car if your vehicle is being repaired as part of a claim.

There are four types of rental car insurance that you can get through a rental agency: liability coverage, loss damage waiver, personal accident insurance, and personal effects coverage.

Liability Coverage

Liability coverage insures you against the property damage and injuries you cause to others in an accident. In the US, every state requires a minimum amount of liability insurance on car insurance policies, so you may already have liability coverage through your personal auto insurance. If you are renting a car in a different country, your personal insurance may not cover you, so you may need to purchase liability insurance from the rental company.

Loss Damage Waiver

A loss damage waiver (LDW) or collision damage waiver (CDW) means that you won't have to pay to repair or replace the rental car if it is damaged or stolen. These waivers typically include a deductible. Your regular car insurance policy may include collision coverage for rental cars, but it may not cover all the rental company's charges, such as loss of use fees.

Personal Accident Insurance

Personal accident insurance covers medical, ambulance, and death benefits for you and your passengers. According to Consumer Affairs, these benefits may already be included in your health, life, or car insurance policies, or in the coverage the car rental company provides. If you're travelling overseas, it's recommended that you carry travel insurance with emergency medical and transportation benefits.

Personal Effects Coverage

Personal effects coverage insures your personal belongings against theft from the rental car, up to a set dollar limit. If you have a homeowners or renters insurance policy, you may also be covered for the loss of personal items stolen from your car.

Frequently asked questions