Does car insurance cover me when I drive a rental car?

Understand how your car insurance covers you for car rentals

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You’ve picked a rental car and are ready to zoom off on vacation. Then the representative at the desk asks if you want rental car insurance. As it turns out, most people won’t need rental car insurance. You may want to consider buying it if your personal car insurance lacks coverage in some areas.

What is rental car insurance?

Rental car insurance, also called car insurance for rental cars, covers you in case something happens while you’re driving your rental car. You can be covered for car accidents, medical payments after an accident, hitting someone’s property and more.

There are three ways you may be covered while driving a rental car.

  1. Car insurance. Your car insurance policy typically covers you for driving rental cars if you have collision and liability coverage.
  2. Credit card. Your credit card may offer some form of insurance for rental cars. But to qualify for the coverage, you’ll probably need to use the card for the entire cost of the rental.
  3. Separate rental policy. The rental car insurance you’re offered at the counter comprises several policy options. None of these policies are mandatory. In fact, certain types of coverage may be unnecessary because you may already be covered by your own car insurance or credit card benefits.

How does my car insurance cover rental cars?

Any coverage levels you have on your existing policy should extend to a rental car. For example, the same liability limits you have on your own car insurance policy will cover you for your rental car.

There are a few coverage exceptions to watch out for. In these cases, it pays to call your insurer to find out your options. Consider taking out the extra rental coverage offered by your car rental company if you’re not covered through your personal auto insurance policy.

  • You own a car that’s much cheaper than the rental. In this case your car insurance covers you, but only up to your coverage maximums. If you only have $10,000 in liability and total a brand new rental car, your car insurance might not be enough to cover damage to a pricey car.
  • Someone else drives your rental car. Typically you’ll need to let the car rental company know who will be driving the car. Your car insurance policy might also not cover you in this situation, depending on how it handles nonowner car insurance.
  • You rent a luxury car. Luxury rental cars aren’t always covered by car insurers, such as Maseratis or Lamborghinis. You can ask your insurer about any excluded vehicles before renting a luxury car.
  • You’re driving outside the US. Most car insurance won’t cover you if you’re driving to Canada, Mexico or anywhere else abroad.
  • You rent an RV or motorcycle. Most insurance companies will also cover motorcycles, but not every one insures other vehicles, and the rental coverage benefit might be excluded for these types of vehicles.

Do I need to buy extra rental coverage?

The main reason you should buy rental car insurance is if your own policy doesn’t protect you. Even then, you might decline rental car coverage. For example, you may feel your belongings are easily replaceable; in that case, you might decline personal effects coverage.

Generally, your insurance will cover rental cars — but it’s a good idea to be sure. Check your own policy or call your insurance agent. And keep in mind that if your insurance does cover rental cars, you will still have to pay your deductible in case of an accident or any damage.

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How do I buy rental car insurance?

When you rent a car, the representative at the counter will ask whether you’d like to add insurance. To make a smart decision, it’s a good idea to know beforehand what your personal insurance already covers.

What are the types of rental car coverage?

You’ll likely come across four types of rental car coverage:

  • Personal accident insurance
  • Collision damage waiver
  • Personal effects coverage
  • Supplemental liability protection

Let’s talk about each of these policies and why you might need them.

Personal accident insurance

Personal accident insurance covers you and your passengers in any accident. Specifically, you’ll be covered for the costs of medical assistance, ambulances and death up to your coverage level.

Should I get it? You probably don’t need medical coverage if you have health insurance. Most insurance policies offer reimbursement for ambulance rides too. It could be worth buying if you’re worried about death benefits and don’t have life insurance.

  • Typical cost: $1 to $5 per day
  • Typical medical coverage: $3,500
  • Typical ambulance coverage: $150
  • Typical death benefit: $175,000 for renter; $17,500 for passenger

Collision damage waiver

With a collision damage waiver, you’ll pay a reduced cost or nothing at all if your rental car is stolen or damaged. This is also called a physical damage waiver or a loss damage waiver.

Should I get it? Double check your own auto insurance, since it probably already covers damage to rental cars. It’s worth doing a bit of research in case your insurance doesn’t protect you.

  • Typical cost: $9 to $19 per day
  • Typical coverage: Varies depending on rental car agency

Personal effects coverage

Personal effects coverage reimburses you for the theft of your possessions from the rental car. This coverage typically extends to members of your family as well.

Should I get it? Coverage for stolen items usually falls under homeowners insurance. Check your own insurance policy terms to see if you’re protected.

  • Typical cost: $1 to $4 per day
  • Typical coverage: $500 to $1,500 per person

Supplemental liability protection

Supplemental liability protection will cover you if you damage someone’s car or property or if you’ve incurred medical costs for injuring someone.

Should I get it? You probably have liability coverage from your own insurance policy. If you think your coverage is too low, supplemental liability protection can be a stopgap measure — but you may want to consider umbrella insurance for the long term.

  • Typical cost: $7 to $14 per day
  • Typical coverage: $1 million

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How to protect yourself from a damage claim

It’s not often that a car rental company will make a damage claim against you, but it can happen. And if it does, you could be on the hook for hundreds or even thousands of dollars in damage if you’re not covered by insurance. So you’ll want to be protected.

Here are some steps you can take to protect yourself from a possible damage claim from the rental company:

  • Inspect the rental car with an employee and note in writing all of the existing damage, no matter how minor.
  • Take pictures of any damage before leaving the lot and make sure the photos are timestamped.

Even if you are covered against damages by insurance, it’s a good idea take these precautions to insure you’re not held liable. Some rental companies even require that you inspect the car before they turn over the keys. A little precaution could prevent a future headache.

Bottom line

You probably won’t need to buy rental car insurance. However, it can be a smart choice if your personal car insurance lacks coverage in certain areas.

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