Do You Need Insurance to Rent a Car?

You do not need personal auto insurance to rent a car.¹ Rental car companies carry liability insurance on all their vehicles. However, you may be liable for damages to the car if you don’t buy additional insurance.

You should buy rental car insurance because you are still liable for damages to the rental car in an accident. The liability insurance that the rental car comes with only covers other cars’ damages and other people’s injuries. Rental car companies don’t insure cars for comprehensive and collision coverage, which would cover the vehicle repairs if you get in an accident or incur other damage, like hail damage.

If you don’t have a personal auto insurance policy with comprehensive coverage and collision coverage, or a credit card that includes rental car coverage, you need a supplemental policy. In that case, you will want to buy the car coverage the rental company offers to protect you against losses.

Rental car coverage is worth the money you pay for it. As the person taking responsibility for the car in the rental agreement, you are liable for any damages that happen to the vehicle, which could cost thousands of dollars to repair. Without rental car insurance, you’d pay for those damages out of pocket.

Rental car companies insure their vehicles as state law requires, which usually means liability coverage for all vehicles in the fleet. The law doesn’t require rental companies to have comprehensive or collision coverage on their cars. Rental car companies pass this risk on to you, the rental party.

You have four options when you take possession of the rental car:

• Waive coverage and take on the entire risk.
• Use your own insurance to cover the vehicle in the event of an accident.
• Use the coverage from your credit card company.
• Opt for the insurance the rental car company offers to fill in the coverage gaps.

Your own insurance covers the rental car up to your policy limits. If you don’t have comprehensive or collision coverage on your own policy, you won’t suddenly get coverage for a rental car with it. Without these coverages, you need to add coverage for the rental car another way.

Some credit cards offer the benefit of rental car coverage. When they do, they cover car damage, theft, or vandalism of the rental car. This is usually secondary coverage that kicks in after you use your personal insurance.

To fill the rental vehicle company’s gaps in insurance, you need comprehensive and collision coverage. The rental car company’s insurance doesn’t cover medical payments, personal injury protection, or personal accident insurance, so you’ll need those coverages as well.

If you opt for the rental car company’s insurance, you can add on a loss damage waiver, which waives fees charged by the rental car company while its income-producing car is out of commission. The company will also offer loss of use, personal property damage, medical bills, and supplemental liability coverage.

If you have auto insurance with collision and comprehensive coverage, you can usually waive the coverage that your rental car company offers. You might not see a justification to spend extra money for rental car coverage. However, if you don’t have a full coverage policy or coverage from your credit card, you’ll want to opt for the rental company’s coverage.

There are no additional costs when you use your own insurance or credit card to protect the rental car. However, you may pay up to $26.99 per day for a loss damage waiver when you purchase insurance from the rental company. You might spend an additional $3 to $4 per day for personal accident insurance and up to $5.99 per day for emergency roadside assistance. Costs vary by carrier and location, so be sure to ask about all fees when renting the car.

If you rent a car and need insurance, follow these steps to make sure you have coverage:

1. Check with your current insurance carrier about coverage.
2. Ask the rental car company what coverage is in place for the car, such as liability coverage.
3. Fill in the gaps as needed with credit card coverage and the rental car company’s coverage.

Ask the following questions to understand the coverage from the rental car company fully:

• What does this rental car insurance plan cover?
• What is the maximum limit of collision coverage?
• Is there a deductible?
• Is the rental car insurance primary or secondary coverage? (Primary coverage pays first, followed by secondary coverage.)
• Does the policy cover loss of use?
• Is the entire car covered?
• What are the exclusions?

When you rent a car, you are responsible for damages to the vehicle. While it is possible to waive coverage, you do so at your own risk if you don’t have a full coverage insurance policy to protect you. These rental car insurance facts can help you get the proper coverage when renting a car.

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