If you have rented a car, the chances that you have been warned about the consequences of not buying the company’s insurance are high.
Rental car insurance is not required by law, but it can protect you from financial responsibility if your rental car is damaged or stolen.
Rental car insurance coverage typically includes collision damage waiver (CDW) and liability insurance.
After all, if you have car insurance at home, why would you need it for a rental?
And if you don’t have car insurance, is the extra cost of renting worth it?
Here’s a quick guide to help you make the decision that’s right for you.
What Does Car Rental Insurance Cover?
Car rental insurance provides coverage when driving a rental car. There are 4 main car rental insurance options that could be offered through a rental agency namely:
- A loss damage waiver(LDW)/Collision damage waiver (CDW)
- Liability coverage
- Personal accident car rental insurance
- Rental car personal effects coverage
More on this is explained below.
Is it Necessary to Buy Rental Car Insurance?
In some circumstances, it is necessary to get yourself rental car insurance even if you have personal auto insurance.
Your personal car insurance policy may have some limitations regarding rented vehicles.
For example, your policy might not cover damages if you’re renting a vehicle for business purposes.
Additionally, your personal car insurance policy might have a deductible that’s higher than the cost of renting a vehicle.
If you are going to another country other than US and Canada, most personal auto insurance will not cover you, so you may need to get rental insurance for that trip.
Also, it is necessary to get car rental insurance if you want to get more coverage for your trip. This is always the case if you’ll be driving in an unfamiliar area or under bad weather and nervous about possible damage to your rental car.
In one word, rental insurance is expensive-it and can easily double your rental costs if you opt for full coverage.
In fact, you should keep in mind that all rental vehicles are already covered by the minimum requirements in their state. So technically you may not need to get rental insurance.
However, it is crucial in some situations. There are 8 good reasons to buy car rental insurance, which I have explained below.
Difference between Car Rental Insurance and Personal Auto Insurance
|Car Rental Insurance||Your Own Policy|
|A loss damage/collision damage waiver essentially says that the rental company will not come after you in the event that the rental car is damaged or stolen.||If you have a collision and comprehensive coverage on your policy, it extends to your rental only when renting within US and Canada. You must not be using it for business. When filing a claim, you are responsible for your deductible. Your premium rates will probably increase after filing a claim.|
|Personal accident insurance covers medical costs for you and your passengers if any if you are involved in an accident.||Your personal medical payments coverage through your auto policy covers medical costs within US and Canada. For travelling overseas, you can get travel medical insurance.|
|Personal effects car rental coverage pays for stolen belongings in the rental car up to the policy limit.||Your own homeowner insurance policy will generally cover your possessions if they are stolen, even during overseas travel. You just have to file a police report and pay your deductible.|
|Liability coverage covers damages and injuries you cause to others in a crash, up to your policy limits. Typically, they can go up to $1milllion.||Your own liability insurance will typically cover you when you’re driving rental cars within the US and Canada.|
If you want more coverage you can grab rental insurance at the counter.
Types of Car Rental Insurance
A loss damage waiver(LDW): A loss-and-damage waiver is a type of insurance that can help cover the cost of repairs if your rental car is damaged or stolen.
It waives your responsibility for damage due to a total loss, accident, theft or vandalism. This type of coverage can give you peace of mind when driving a rental car.
These damages can also be covered by collision and coverage policy of your primary vehicle. So if you already have one, you don’t need this.
Collision damage waiver (CDW): The difference between a collision damage waiver and a loss damage waiver is that (CDW) doesn’t cover theft.
It generally says that the rental company will not come after you in the event that the rental car is stolen or damaged.
However, if you have collision and comprehensive car insurance, this may be included in your policy.
Liability coverage: This car rental insurance covers damages and injuries you cause to others in a crash, up to your policy limits.
If you only have liability insurance, your own injuries and any damage to your rental car won’t be covered.
If you have personal liability insurance, it can provide coverage provided that the trip isn’t for business.
Personal Accident Car Rental Insurance: This covers medical costs for you and your passengers if any if you are involved in an accident regardless of who is at fault.
However, if you have personal injury protection (PIP) or medical payments coverage under your policy, you may already be covered.
Rental car personal effects coverage
This type of insurance covers your personal items like electronics, etc in a rental car.
If you have a homeowners or renters insurance policy, it will cover personal items stolen from a rental car as well.
Our study on Does State Farm Cover Rental Cars After Accidents is an excellent resource before you go for that trip.
8 Reasons to Buy a Car Rental Insurance
You want more coverage
If you’ll be driving in an unfamiliar area or in bad weather and are nervous about possible damage to the vehicle, you might consider either raising your coverage levels or picking up additional coverage from the rental car company or a third-party provider.
Your personal car insurance has a very high deductible.
You don’t want to have to pay the deductible out of your own pocket if something happens and you need to file a claim. If the deductible on your auto insurance policy is high, it would apply to your rental car too.
To avoid such a burden, you might choose to get car rental insurance for your trip.
You are travelling to another country.
Most insurance companies cover rental cars in the US and Canada. If you are travelling outside these two countries, you need to get supplemental insurance.
You are travelling for business
In most cases, your personal auto insurance policy won’t cover you if you are travelling for business. You will need to get supplemental insurance.
You don’t have any coverage currently
You may need to buy car rental insurance if you don’t own a car and therefore have no personal car insurance policy, and you’re not using a credit card that offers rental car coverage.
You are renting a premium vehicle/expensive than the one you own.
Your personal auto insurance only covers up to the policy limits of your primary vehicle. If you decide to get a vehicle with all the bells and whistles for a weekend, you may need to beef up the coverage by getting an additional insurance policy. This will lessen your burden in case of an accident.
You don’t want to use your personal insurance
Making several claims might raise your premium significantly. To avoid paying higher premiums, you can decide to get car rental insurance.
You don’t have health or medical payment coverage on an existing policy.
If you don’t have health or medical payment coverage, you may consider getting a personal accident protection insurance over the counter for the trip.
This will cover all the medical costs for you and any passengers if you are involved in an accident.
Which Insurance Providers Offer Rental Car Insurance?
|Insurance provider||Cost per day($)|
|Bonzah||Starts at $7.99|
|Insure My Rental Car||Starting at $6|
|Sure||Starts at $7.99|
|Allianz||$9($7 for Florida residents)|
The study of the best car rental insurance companies by Iwillteachyoutoberich.com is an excellent resource.
Conclusion-(Summary of Is it Necessary to Buy Rental Car Insurance?)
In conclusion, it is not necessary to buy rental car insurance if you are already covered by your own auto insurance policy.
However, it is important to check with your insurance provider to make sure that you are adequately covered before you rent a car.
If you are not covered, or if your coverage is not enough, then purchasing rental car insurance may be a good idea.