Does My Car Insurance Cover Car Rentals?
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Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.
Whether you’re traveling and need a vehicle or are in an accident and need a temporary mode of transportation, there’s a good chance you’ll one day find yourself behind the wheel of a rental car.
When that day comes, will you know what insurance coverage you have? Most auto insurance policies will extend to your rental car, but it’s not black and white. That’s why our independent insurance agents are available to help you understand rental car insurance and how to get the coverage you need.
Does My Current Car Insurance Cover My Rental Car?
In short, yes. Your personal auto insurance will most likely offer some sort of coverage for a rental car if you have liability, collision, and comprehensive insurance. However, you’ll only be covered up to the limits available on your personal policy, and you may not be covered for every situation.
When you’re driving any car, there are two types of damage you can do. You can do damage with a car and you can do damage to a car.
Most policies will provide coverage for any damage you do with a rental car. It’s part of your liability insurance. It’s the damage you potentially do to a car that can make things complicated.
If you’re driving a rental car and you dent the car, your insurance may not cover the damage unless you have the proper collision coverage on your personal car and it extends to a rental vehicle.
What Types of Insurance Does the Rental Company Offer?
When you rent a car they’ll ask if you want to purchase their insurance. There are four insurance options that rental companies offer, and you can choose them individually or deny insurance from the rental company.
- Collision damage waiver (CDW): Provides coverage if the rental car is stolen or damaged while in your possession. This costs between $9 and $12 a day depending on the value of the vehicle. Most personal auto insurance policies include collision damage, so it’s best to understand your personal policy before paying extra for this coverage.
- Supplemental liability protection (SLP): Provides additional liability coverage in the event of damage to someone else’s car with your rental car and third-party medical costs. SLP costs around $10 a day. Every state requires a minimum of liability coverage for car owners, and that’s the amount offered by SLP. Since you already have liability insurance through your personal auto insurance, you only need the additional coverage if your limits are low.
- Personal accident insurance (PAI): Provides coverage for medical, ambulance, and death benefits for you or the driver of the rental car. PAI is usually a minimal cost of less than $5 a day. The benefits of PAI may already be included in your health, life, or car insurance. That will determine whether you should purchase this coverage or not.
- Personal effects coverage (PEC): Provides coverage if your rental car is burglarized and your personal possessions are stolen out of the vehicle. Costing only a couple of dollars a day, this is another inexpensive add-on. However, this coverage may also exist in one of your other insurance policies, so it’s best to check with your independent insurance agent to know what coverage you already have.
What Personal Insurance Do I Need to Cover My Rental Car?
The amount of personal auto insurance you have will greatly affect how much coverage you’ll already have when you rent a car.
Understanding what your personal auto policy has and how it transfers over to a rental car can help determine whether you need additional insurance offered by the rental insurance company.
- Liability insurance: Your personal liability insurance will provide protection against any damage you do to another vehicle in your rental car if you’re at fault.
- Collision/Comprehensive insurance: Your collision insurance will protect you from any damage done to the rental vehicle and from any fees the rental insurance company may charge as a result of loss of income due to not being able to use the vehicle while it’s being repaired.
- Personal accident insurance: Your personal accident insurance will cover any bodily injuries you suffer if you’re in an accident in a rental car.
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When Should I Purchase Additional Rental Car Insurance?
At such low costs, it’s easy to be tempted to add one or all of the insurance options offered by rental car companies. But if you have a comprehensive insurance plan, you most likely don’t need the extra insurance.
Here are a few scenarios where you would consider the additional insurance:
- If you don’t have collision and comprehensive coverage: If your personal auto policy is liability only, you’ll want to consider purchasing the collision damage waiver to protect yourself against any damage that may happen to the rental car itself.
- If your liability limits are low: In some states the mandated minimum liability coverage is as little as $15,000 per person. If you cause an accident that results in anything more than $15,000 in damage, you’ll be responsible for the difference.
- If any of your personal insurance doesn’t extend to a rental car: If your health insurance does not offer coverage if you get injured in an accident while driving a rental car, then you may want to consider purchasing the personal accident insurance.
- If you’re renting a car internationally: If you’re renting a car outside the US you’ll have an entirely new set of rules and guidelines to understand. Most car insurance companies will not extend outside the US, so it’s smart to opt for the offered additional coverage.
- If you’re renting a car in bad weather: If you’ll be driving a rental car in heightened dangerous driving conditions, like a winter storm, you may want to consider adding extra insurance.
Understand What Insurance You Have to Know What You Need
The easiest way to know whether you need to purchase additional car rental insurance is to understand your risks and what your current insurance offers.
If you’re in an accident in a rental car, the rental company will hold you responsible, not only for the damage, but also for the lost income from the car being out of service, any claims handling fees and administrative work, and sometimes the diminished value of the vehicle.
If you’re not educated on your coverage, a small fender bender in a rental car could turn into a huge money pit for you. That's why our independent insurance agents can help break down your car insurance policy and let you know where you're covered and where you could use some help.
They’re also available throughout the claims process and can answer any questions you have about your insurance policy should you get in an accident in your rental car.