Insurance to Rent a Car? Know What Is the Best Practice, Now!

TLTR: Renting a car is pretty straightforward, but what about insurance? More often than not, people wonder, “Do I need insurance to rent a car?” If that’s you, this article has the answers you need.

A cursory Google search reveals that many people still don’t clearly understand whether or not their own car insurance covers their rental vehicles.

Most of us are under the impression that our credit cards will cover us if something were to happen. But we’ve all heard horror stories in which renters are forced to pay upfront for damages and then get stuck in long battles with their insurance companies, attempting to get reimbursed.

Don’t sweat it. This article will explain all you need to know about rental car insurance.

Do I Need Insurance to Rent a Car?

Imagine you’ve just rented a car. The car rental company offers a collision damage waiver (CDW) worth around $30/day, but you have a credit card with insurance on it.

To get CDW from your credit card, you must:

• Decline whatever coverage the rental company offers you
• Pay for the rental car in full with your card

When you return the car after a dew fays, the inspection reveals that there’s a new dent in the hood that needs to be repaired. The rental company swipes your credit card for the cost of your deductible. But later on, you find out that the repair plan involves filing the dent as well as repainting the entire hood. The total comes to around $2,000 minus your deductible. Unfortunately, your card’s insurance limit is only $1,500.

Rental car insurance is a policy that protects you from paying hefty charges like this when you’re renting a car. It can seem like an unnecessary expense, but relying on your credit card’s policy can cost you more in the long run.

What Insurance Do I Need When I Rent a Car?

Typically, a rental car insurance policy offers three types of coverage:

Theft coverage

It covers you if your rental car is stolen or damaged during an attempt at theft. Imagine a thief breaks into your rental and drives off with it. Replacing a sedan can cost you anywhere between $20,000 to $30,000. Rental car insurance will guarantee that the money won’t come from your savings.

Property damage

If the rental car suffers any damage while under your care, the company will charge you. Rental car insurance will cover the cost on your behalf. For instance, a collision with another car leaves your rental in need of repairs. The repainting job alone comes to several hundred dollars. Do you want to pay for it out of pocket? Let rental car insurance save you the money.

Third-party liabilities

If you damage third-party property or cause injuries, the coverage will pay for their medical expenses and property repair or replacement. Imagine paying for car repairs of a luxury vehicle after colliding with it. That’s easily more than what you’re paying for the rental car. Third-party insurance will also cover any medical bills, pain and suffering, and other emergency expenses that the other driver or passengers may require.

You can also opt for optional CDW coverage. Similar to collision insurance for your personal vehicles, the collision damage coverage will only cover the damage of the rental auto. You won’t be reimbursed for any third-party liabilities. Furthermore, it won’t cover window repairs.

When Do You Need Rental Car Insurance?

Insurance is mandatory if you plan on driving any vehicle. Almost all states in the U.S. require you to purchase liability coverage before you drive in the streets. If you’re wondering whether you need insurance to drive a rented car, consider the following scenarios:

You don’t have collision and comprehensive coverage under your current auto policy

You’re a smart driver if you’ve already purchased a personal auto policy. But do you have all the important coverage? Collision and comprehensive coverage aren’t mandatory, so it makes sense if you’ve skipped on them. If you don’t have the policy, then you should definitely get rental car insurance.

Additionally, if you want to rely on your personal auto policy for car rentals, make sure you’re not skimping on full coverage. Most states in the U.S. have minimum state limits of liability, but it’s just pennies on the dollar. Hospital bills can have you paying $20,000 per day, and a $15,000 medical coverage hardly covers it.

You’re going on a business trip in your rental vehicle

Your personal car insurance can cover many things, but when it comes to using your personal auto for commercial or business purposes, there are many limitations. Rental car insurance will cover you in such cases.

You don’t carry any car insurance

Non-owner car insurance will only cover liability and leave you vulnerable to collision and other perils. A collision damage waiver coverage will take care of your rental auto as well. To reiterate, driving without an auto insurance policy is illegal in most states in the country. Relying on your credit card’s insurance alone will expose you to many loopholes that a rental car insurance policy covers.

Rental Car Insurance Vs. Your Own Auto Insurance

If you have already purchased full coverage car insurance, you can rest easy. That’s because the auto insurance policy will usually transfer to your rental car as well. However, if you get in a wreck or suffer more than just fender-benders, the insurance coverage will be subject to your deductible. You would also have a claim on your policy, which will have surcharges.

A rental car insurance policy will pay for your damages, be it third-party or your own. Additionally, you don’t have to worry about any surcharge in your premium due to your previous claims.

Secondly, most car insurance companies don’t cover a loss-damage waiver. Of course, your personal insurance will cover the damages to the rental vehicle. Rental companies, rather sneakily, will charge for the loss of income for not being able to rent out the car while it’s being repaired. Loss damage waiver under rental car insurance will cover these expenses.

How Much Is Rental Car Insurance?

MarketWatch claims that the price for average rental car insurance ranges from $30 to $60 per day.

Here’s a brief list of coverage options and their prices according to Policy Genius:

Liability Insurance – $12 per day
Loss Damage Waiver – $30 per day
Personal Accident Insurance – $3 per day
Personal Property Insurance – $2 per day
Nerd Wallet claims that the typical limit for liability coverage ranges from $300,000

Car Rental Insurance Companies

There are lots of options available when you look to shop for rental car insurance. You can rely on your current personal insurance, credit card’s coverage, third-party companies, and top national providers for the policy of your choice.
We recommend comparing quotes, prices, and coverage options before purchasing a policy. Remember that third-party companies rarely offer full coverage and usually will leave you out in the rain when you need them the most. Moreover, credit card insurance usually doesn’t have proper coverage limits. Here are a couple of insurance providers who also offer rental car insurance:

Allianz Global Assistance

Allianz Global Assistance offers multiple types of coverage and benefits such as trip interruption, baggage loss/damage, and collision damage waiver of up to $750,000. You will be paying a total of $11 per day for their rental car insurance.

GEICO

GEICO is a great national insurance provider, with an A++ financial rating from AM Best. They offer a multitude of coverage options apart from rental car insurance. Many customers prefer GEICO for being in the industry for over 80 years and having great customer service.

Is It Worth Getting Insurance on a Rental Car?

Of course, you can just rely on some random rental car insurance and go on your merry way. But you would be compromising on your peace of mind. What if that dent on your car needs buffing and repainting? What if you and your passengers need expensive medical care? Could your credit card insurance handle it?

We understand that insurance is a tricky friend. If you’re not sure how to purchase a policy, let one of our experts help you. Find an agent from our insurance directory and start discussing your insurance needs.

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