Anyone who has rented a car anticipates that dreaded question, “Would you like to purchase rental car insurance?” As you ponder the question, you think, well I know I have car insurance, wouldn’t that cover me if I’m in an accident? Even some credit cards cover car rental insurance, but will it cover injuries and damage if I’m at fault?
Moreover, not owning a car means that you don't need auto insurance. However, being covered by an insurance policy is a good idea when you frequently rent vehicles. Uninsured drivers face financial risks if the rental vehicle is damaged while they were operating it. That's why it's recommended to prevent such situations with a rental car coverage. Rental car insurance coverage is worth it even if you have a personal auto insurance policy as primary insurance. Some options may be covered by rental car company coverage (comprehensive and collision coverage), however the coverage limits may be low.
Does my current car insuance cover my rental car insurance?
Generally speaking, if you are driving a rental car for personal use, not commercial use, your policy should transfer to the rental car if the rental car is of similar value to your personal car. Be aware, if you are insured on a Honda Accord and you rent a Rolls-Royce, you may not be covered. Additionally, some carriers may require that the car for which you are insured remain parked and not in use while you are renting a vehicle. Check with your carrier to see if this a requirement. Also noteworthy, if your policy has rental reimbursement coverage, this is specifically for renting a vehicle if your car is being repaired because of an accident, not for renting a car for personal reasons.
Typically, a car rental company will offer you several options including:
Collision Damage Waiver: if the rental car is stolen or damaged, this coverage shifts the responsibility from the renter to the car rental company. This coverage may cover towing charges, related fees, and loss-of-use charges. However, it may not extend to accidents caused by speed, driving while intoxicated, and driving on unpaved roads.
Am I already covered? Check your policy, but chances are you are covered for collision (damage to your vehicle due to a collision with another vehicle) and comprehensive coverage (theft of your vehicle or damage caused by something other than a car accident). The credit card you use to secure your rental car may also cover you for damage and theft — be sure to check with your credit card company first. Certain credit card companies will provide the collision damage waiver if you secure the rental car and pay in full with their credit card; however, you may be required to decline the rental company’s car insurance. Check with your credit card company, but it may also cover both the credit card user and those authorized drivers on the rental contract. Credit cards offer secondary coverage on rental cars and help fill in the gaps after you've filed an insurance claim with your auto insurer.
As for loss-of-use charges, these relate to the rental shop’s lost earnings due to the rental car’s time in the repair shop. Your personal auto policy will likely not cover this; however, the credit card used to secure the reservation may cover loss-of-use charges (check with your credit card issuer). An example of loss-of-use occurs when the cost to rent a vehicle is $30 per day, and the rental car is in the repair shop for ten days. The loss-of-use charge would be $300. The controversy surrounding this is that there is no guarantee that the company could rent the vehicle for the full time that it was in the repair shop. This provision has been upheld by some courts, so it’s important to understand you might be responsible for this charge.
Liability coverage: liability coverage protects you against lawsuits because of injuries and damages sustained by the other vehicle, its driver and passengers, or other property damage, e.g. a fence.
Am I already covered? Most states require liability coverage. Those states that do not require it or have different types of requirements are New Hampshire, Mississippi, and Virginia.
Personal accident insurance: covers you and your passengers’ medical expenses after an accident, not the medical expenses of the other vehicle’s passengers.
Am I already covered? You can find this type of protection in the PIP section or medical payments coverage of your policy. Additionally, your health insurance may cover your injuries.
Personal effects coverage: covers the personal items in your rental car, not to damage caused to the personal effects in another vehicle.
Am I already covered? Depending on your policy, you may be covered for some of your personal effects under the comprehensive portion of the policy. However, there is a good chance that not all of your personal items will be covered, especially in the case of a break-in. Instead, look to your homeowners or renters insurance policy to see if they are covered there.
As you can see, most of these coverages are duplicative. Times when you may want to consider purchasing the policy is when you use the rental car for commercial purposes, when you are renting a car outside of the United States, or if you don’t have one of the above-mentioned coverages.
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