Insurance Coverage For Your Rental Car

Renting a car, whether for work or for pleasure, can be a great chance to try out a new vehicle and enjoy some extra luxury, but it is important to ensure that you have proper insurance coverage in case anything goes wrong. With all the different options for renting cars, it can get a bit confusing when it comes to what coverage you need.

First, look at the coverage you may already have, then, if you need it, add on extra coverage.

Coverage You May Already Have

In order to avoid paying an additional premium for insurance coverage through the rental service, ensure that you aren’t duplicating coverage you already have. Examine current coverages, including your auto insurance, homeowner’s/renter’s insurance and even your credit card benefits and figure out how they would cover you when using a rental car.

Auto Insurance

  • Often, at least with rentals used for recreation, the insurance and deductibles you have on your own car would apply to the rental car.
  • Without collision and/or comprehensive coverage, you may not be covered if your rental car is stolen or damaged.
  • Check whether your auto insurance coverage will cover additional costs, such as administrative fees, loss of use, or towing charges.

Homeowner’s/Renter’s Insurance

  • Typically, these policies will cover the belongings in your vehicle if they are damaged, lost, or stolen but you should verify this coverage and the associated plan details.

Credit Card Benefits

  • Some credit cards, depending on the issuer, level of card, etc., may offer additional insurance coverage.

These benefits are usually meant to be used as secondary coverage.

Additional Coverage You Should Consider Obtaining

Depending upon what coverage your current policies offer you, you may want to add on additional insurance. The coverage you are required to have or may want to have can be different depending upon the type of rental option you choose, as well.

If you are renting a car from a traditional brick-and-mortar rental company, like those found at airports or train stations, you will typically be offered a standardized additional insurance policy, though the details of these policies can vary. If you have examined your own coverage and find that you need additional insurance coverage, add coverage that the rental company offers. According to the Insurance Information Institute, the coverages they offer will typically fall into the following categories:

  • Loss Damage Waiver (LDW) – A LDW is a benefit that is meant to waive renters of financial responsibility if the rental car is damaged or stolen. Typically, collision and comprehensive coverages will cover damage, but you should check with your insurer. LDWs may also include coverage for administrative fees, towing charges, or loss of use charges, which your insurance company may or may not cover.
  • Liability Insurance – Legally, rental companies must provide required state minimum amounts of liability insurance coverage. The legally required amount of coverage provided is likely lower than the recommended amount of coverage you should have. Your own auto plan likely has higher liability coverage, but if you do not have your own liability plan, you will need to purchase liability insurance.
  • Personal Accident Insurance – This type of policy provides coverage for medical and ambulance bills for the driver and passengers in the event of a car crash. Depending upon your health insurance and your auto insurance’s personal injury protection, you may want to consider this coverage.
  • Personal Effects Coverage – This policy will provide protection for items that are stolen from a rental car. Your homeowner’s or renter’s insurance may cover this type of loss, but if they do not, you may want to consider purchasing additional coverage.  

If you are renting a car with a car sharing program or peer-to-peer rental service, there may be insurance included through the company you rent with, but these policies are not standardized so you will want to review the coverage they offer and discuss with your agent or broker if you have questions.