Should I Get Rental Car Insurance?

rental car insurance

At this point, you’re waiting in line at a Hertz, Enterprise, or Alamo about to rent a car for the trip you’re currently on. While thinking about what kind of car you’d like to rent, you start to wonder about whether the rental is covered by insurance if something should happen.

Rental car insurance has a multitude of coverage policies from several different insurers as options. The rental policies cover damage to the car in the event of a collision, injuries to yourself and others, and if anything goes missing.

It would seem to be a no-brainer to get rental insurance if your own insurance doesn’t cover rentals. It also depends on where you’ve traveled and the amount of time the rental will be in your possession. And, there’s also plenty of terms and conditions for rental insurance to be valid. It’s important to know how car rental insurance works, the types of insurance, and whether or not the additional purchase is worth it.

So, how does rental car insurance work?

Your rental car coverage can come from three possible methods depending on the policy. The main goal is to protect people when driving a rental car.

A couple of places car rental insurance can come from are:

  • Personal insurance policy. Your own insurance may cover rentals. Based on your policy, you would be able to get the same comprehensive or collision coverage on the rental just as you would with your personal car. An employer’s insurance policy would cover you the same way if you were using the vehicle for business purposes. Your auto and health insurance can both cover the rental.
  • Credit card company. Credit card companies will often cover their client’s car rental insurance if said card is used as a method of payment. This coverage is valid for short-term rentals as a secondary form of insurance. If you’re traveling outside the United States and need to rent a car, then there may be some countries where this option of rental car insurance isn’t available.
  • Rental car company’s policy. Upon checking out your rental car at the counter, they’ll offer you their own company rental insurance. The coverage options can be bought separately or together as a package. These types of rental insurance are the best option if your auto insurance policy isn’t applicable. Prolonged and/or abroad business trips are the best circumstances to purchase it.
  • Rental company’s standalone policy. Suppose you choose to opt-out of the rental car insurance offered by the rental company. In that case, you have the option to accept standalone providers in the United States like Allianz, Insure My Rental Car, and Bonzah. Standalone policies are convenient because they can be purchased ahead of time and can cover up to $10,000 in rental car damage.

Let’s talk about the rental car company’s available insurance policies. What kind do they offer?

There are several types of coverage plans that the rental car company can offer you.

Here are the ones you can select from at the rental counter:

  • Rental car liability insurance. This kind of liability insurance covers damage in collisions and accidents in a similar manner to collision insurance. The car you hit, the other driver, and their property is covered by rental car liability. Your rental car is not covered if the accident was your fault. Also sometimes called “liability insurance.”
  • Collision damage waiver. Also known as a loss damage waiver, this policy covers you if you cause damage to the rental car. It works similarly to collision coverage. However, some collision damage waivers are exempt from natural disasters causing car damage. Deductibles may also not apply.
  • Personal accident insurance. In regular cases, medical costs for anyone are covered by personal injury protection. Personal accident insurance does the same for anyone injured in your rental car during an accident.
  • Personal effects coverage. Personal items stolen from your rental car or lost during a car theft are covered by personal effects coverage. Homeowners and renter’s insurance work in a similar fashion. There may be some items that are excluded from the coverage.

When and why would getting rental car insurance be the best option?

Purchasing coverage directly from the rental company offers a couple of direct benefits. If you were to walk into a rental car office with no car insurance, then you’d purchase insurance directly from them with a credit or debit card. Rental companies will also accept cash. At the same time, you’d pay fewer deductibles than you would if you had car or health insurance.

Rental car companies often include costs that normal insurance will not cover, such as administrative or tow truck fees in a collision. When traveling out of the country, it always helps to buy the rental insurance they offer since your personal policy may be exclusive to the United States. Lastly, if your trip is especially lengthy, then your own coverage is limited. If the car will be in your possession for more than two weeks, then it’s best to take the rental insurance being offered.

But what if I think I should use my personal auto insurance?

Your personal car insurance policy may already cover you in cases of rental cars. At that point, you may opt to use your policy over rental insurance offered at the counter. For starters, using your own insurance will save you more than car rental insurance-assuming that they cover car rentals. You’ll also save trouble by working with a company you’re familiar with, especially if you have a reliable auto insurer. You’ll save time when it comes to the paperwork or lack thereof.

Getting the car rental company’s insurance may be wise (and mandatory) when your personal auto insurance doesn’t provide coverage against rental car accidents. Liability insurance isn’t enough to cover a vehicle that you are renting. As previously mentioned, your personal policies may not apply when traveling overseas. Buying insurance from renters is best when abroad. Using your personal policies normally requires filing a claim. Approving the claim for a car you don’t own can lead to technical issues and is often not a smooth process.

You mentioned credit card payment as a form of rental coverage.

Renting the car with your credit card may result in the rental vehicle being covered as a benefit from your card company. This is something that varies by the card company. It’s common that credit card coverage includes rental theft and towing. It typically lacks in personal liability and medical coverage in the event of a rental car collision. Collision damage can be capped at anywhere between $25,000 and $50,000.

Most importantly, your credit card is best used as a method of coverage during short rental periods. If you’re renting a car for more than two weeks, then you’ll find your credit card may not be applicable. There are also several exceptions when it comes to what the card company will cover. Certain cardholders may not cover luxury, exotic, or SUV cars. All major credit cards like American Express, Visa, and Discover offer coverage of rental cars. Mastercard rarely offers any. At the same time, there’s a couple of countries where credit cards don’t qualify for rental coverage-Italy, Ireland, Israel, Jamaica, and Australia, to name a few.

Aside from my auto, what other personal coverages can I use for rental cars?

If your rental is damaged, then there are cases your personal insurance will cover you. We previously mentioned credit card benefits, but what of insurance policies? Aside from your auto coverage, you have your health and homeowners/renter’s insurance that can cover a damaged rental car. Having health insurance covers the medical costs for yourself and anyone else in the car you rented.

Personal accident insurance can cover you in similar circumstances if you don’t have health insurance. Homeowners and renter insurance ensure all your belongings should they be stolen or damaged in your rental. Travel insurance purchased on a trip usually covers incidents involving rental cars. Your own travel insurance may be primary or secondary. Primary insurance is the policy that will kick in first. Once the claim is paid, then the remaining amount will be paid by the secondary insurance.

If I want to buy rental car insurance, how much does it cost?

Each insurance policy that the rental car company offers varies on the type of car you’re renting and location. Rental car liability insurance can cost up to $16 a day, while a collision damage waiver can go up to $30. Personal accident insurance is significantly lower, with a max daily cost of $9. Personal effects coverage can go up to a daily rate of $6. Getting rental insurance can double your bill. You can rent an economy car for an average cost of $45 a day.

Coupled with the collision damage waiver and liability, you’d pay almost or just the same for your rental coverage as you would for the rental car alone. If not, then slightly less. The daily cost for an insured rental car would be an average of $80.

What do rentals typically cost with added car insurance?

Assuming that you have the damage waiver, personal effects, and liability coverage from the rental company, your total rental cost depends on where you have rented the car. You can easily compute your total on a calculator. Some examples are:

  • Hertz. An economy rental at Hertz can cost up to $46 a day. Added collision damage waiver, personal effect, and liability add up to $36 daily. Together you’d be looking at $82 daily total.
  • Enterprise. With an economy car at $44 and the three insurance policies at $33, you’d be paying $77 daily.
  • Budget. Budget offers economy rentals with a daily average of $42. Damage can be waived at $17, personal effects at $6, and liability would be $14. The daily sum of that rental would be around $79.

Well, are there any other coverage options I can do while renting a car?

There are some other coverage options if you don’t have your own insurance, are unable to use your credit card, or just declined the coverage plans the rental company offers.

Non-owner car insurance is available for purchase to drivers who don’t own a vehicle and frequently rent. This coverage provides the minimum requirement for each state for an annual cost between $250 and $500. Non-owner car insurance is also more affordable than what is offered at the rental counters.

As your rental is temporary, so can your insurance be with temporary car insurance. Your insurance company may offer policies that cover you for your rental time. Again, much more affordable than accepting rental insurance. Travel insurance can also cover you medically and personally in a collision, as previously mentioned.

When I rent a car, when would I not have to get car rental insurance?

There are times where it does help to have car insurance and liability coverage of your own. As stated before, you shouldn’t buy rental car insurance if you have auto insurance or a credit card that adequately covers your car rental. It helps to check your life insurance, credit card benefits, and homeowner’s insurance before buying insurance from a renter.

You should also ask yourself, “What is the purpose of my visit? Business or pleasure?” Car insurance, especially your own, only provides coverage for vehicles on personal travels. If you’re on a business trip, then your employer may cover you under their insurance policy. In that case, buying rental insurance seems redundant.

Rental car insurance and how much you’ll have to pay for it depends on the car you’re renting, where you’re renting it, how long you’re renting it, and what kind of car and insurance you have.

It’s important to note that speeding, intoxicated driving, and any driver that isn’t you will not be covered by rental insurance. It pretty much works the same as auto insurance-be a safe driver, take care of the vehicle and research what the best policy would be for you. Your insurance agent should also be able to help you.