Does Car Insurance Cover A Rental Car?

Key Points:

• Rental car companies cover vehicles according to the state’s minimum liability coverage requirements.
• Before you rent a car, check to see what kinds of rental car reimbursement benefits you already have in your auto insurance coverage.
• Many auto insurers offer flexible, short-term rental car coverage.

If you’re renting a vehicle, you may be wondering, “does car insurance cover rental cars, or should I buy a short-term policy from the rental company?” Renting a car is fairly easy, but things get more complicated when you factor in your insurance needs.

It might seem like something you don’t really need to worry about, but knowing the insurance details of a rental car is critical. Does adding insurance to a rental raise the rental price? Does your regular car insurance cover your rental? We’ll answer these and other important questions.

If you’re looking for cheap insurance coverage, enter your zip code above to get free quotes from the best auto insurance companies in your area.

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Do You Need Rental Car Coverage?

People often use rental cars for a short period–it could be for a few hours or even a few weeks. So, why spend money on insurance coverage for a car you’ll only use for a limited time?

Rental car insurance coverage is usually a good idea. But it’s true that if you don’t use it, coverage could seem like another redundant expense. Rental companies cover all vehicles with the state’s minimum coverage requirements, which usually includes liability car insurance. But this only covers other drivers’ cars if you’re at fault for an accident. You’ll have to pay to fix the rental car out of your own pocket.

This is why rental car companies offer additional collision and comprehensive coverage.

How Can I Determine if I Should Purchase Rental Car Coverage?

Whether you need these rental car insurance policies depends on a few factors.

First, look at your current auto insurance policy. If you want to avoid high, unexpected rental costs, make sure your policy includes rental car reimbursement coverage.

You may have rental reimbursement coverage included in your policy. This only covers your transportation costs if your own car is involved in an accident. The typical period that a vehicle is in the shop after an accident is between three weeks and a month. With a rental reimbursement policy, the insurer will take care of your transportation expenses for your car’s duration in the garage. However, this doesn’t cover vacation rentals. Make sure you look specifically for whether your personal insurance extends to rental vehicles.

The type of car you drive may also influence whether you choose to purchase rental car insurance. Want to park your usual, boring car for a day and live it up in a sleek luxury car, like a Mercedes G63 AMG? In this case, you might want to consult the rental car company about extra insurance–nobody wants to be stuck with the tab if you run into some trouble living out your race car driver dreams.

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When Should You Consider Rental Car Coverage?

You don’t want to get caught flat-footed at the rental car counter when barraged with the necessary long list of questions you must answer before you can leave. Rental car businesses ask these questions to ensure the safety of their vehicles. Expect to answer questions such as:

• Do you have auto insurance?
• Will there be more than one driver?
• Does your trip include an off-road detour?
• Will you take additional coverage?

The last question is puzzling, especially if you had no idea rental cars also need coverage. As mentioned, specific auto insurance policies include additional coverage for rental cars. But if yours doesn’t, then you should consider rental car coverage.

Although the car will come with liability insurance, you must either purchase extra collision coverage or sign a waiver that indicates you’ll be financially responsible for all repairs before rolling out the rental car company’s parking lot.

The good news is that many insurers offer short-term car rental insurance. This type of coverage is flexible. Insurers offer bespoke policies to fit all situations. However, the most common temporary car insurance policy runs from two to 28 days.

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What Does Rental Car Insurance Cover?

Though it is temporary, rental car insurance works like standard car insurance. There are a few types of coverage you can select, and most come with a deductible. Your deductible refers to how much you’ll pay out of pocket before your insurance coverage kicks in.

The six standard forms of car insurance cover:

1. Liability: The minimum requirement for most states, bodily injury and property damage liability insurance cover damages to other drivers and items when you’re at fault
2. Collision: Covers damage to your vehicle in an accident, no matter who’s at fault
3. Comprehensive: Pays for repairs due to damage from theft, vandalism, and environmental causes, like floods and fires
4. Personal injury protection (PIP): Required in all no-fault states, PIP covers lost wages, medical expenses, and death benefits for you and your passengers, no matter who caused the accident
5. Medical payments (MedPay): Covers medical and funeral expenses for you and your passengers
6. Uninsured/underinsured motorist (UM/IUM): Protects you when you’re in an accident with someone who has insufficient coverage

What Might a Rental Agency Policy Cover?

Depending on the rental car company you use, you may be offered the following rental car insurance products:

Personal Accident Insurance

The liability protection provided by the rental company will only cover the property damage and medical bills of any other drivers if you cause a car accident. It does not cover you or your rental car. However, you can purchase personal accident insurance from your rental company to protect yourself.

This policy is optional because it could be a redundant cost if your health insurance policy is comprehensive. You may also be covered by your personal insurance company for these expenses, especially if you have personal injury protection (PIP) or medical payments (MedPay) coverage.

Loss Damage Waiver

You might have heard of collision damage waiver (CDW) or loss damage waiver (LDW). This is an add-on that waives the costs you incur in the event of theft or damage to the hired car. Some rental car companies charge customers for the time their vehicle spends in the garage as well. This is known as a loss of use penalty and is covered by a CDW.

Adding loss damage waiver protection to your rental car insurance policy may be expensive depending on the type of car you are renting and how you intend to use the car. For example, a CDW will cost more if you’re renting a car for an off-road trip.

Personal Effects Coverage

Personal effects insurance covers your valuables when using a rented car. It can be useful if you’re traveling and need to keep your luggage in your rental car for a long time, as the insurer will compensate you in case of damage or theft. Some insurers insist that policyholders name the valuables for protection. Others let you select a claim limit for the personal items in the car when the incident happens.

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Pros And Cons Of Rental Car Coverage

If you’ve looked into whether your personal auto insurance will cover rental cars and your policy comes up short, here are a few pros and cons to consider when deciding whether to purchase extra rental car coverage:

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Rental Car Coverage: Our Take

Most people might find rental car insurance a waste of money, but this is not always the case. Even if you already have auto insurance, some policies don’t cover cars that you don’t own. The most important thing you should know is that all insurance policies have exceptions, and it’s important to understand what you’ll be on the hook for in the case of an accident.

If you travel often and are interested in getting a car insurance policy that includes coverage for rental cars, enter your zip code below to find cheap quotes in your area.

Recommendations for Car Insurance

If you’re looking to purchase car insurance coverage, we recommend comparing quotes from Geico and Progressive.

Geico: Best For Basic Coverage

Geico is one of the largest insurers on the market thanks to its low rates and numerous discount opportunities. If you have collision and comprehensive coverage from Geico, your rental car will be covered under your personal auto insurance policy.

Progressive: Best For Usage-Based Insurance

Progressive specializes in offering low-cost auto insurance policies to drivers deemed high-risk. It has a wide range of discounts available, as well as Snapshot^®, its usage-based program that applies a discount based on your driving habits. Like Geico, if your personal car insurance policy includes collision and comprehensive, your rental car will be covered by Progressive.

Read more: Progressive insurance review
Compare these providers: Geico vs. Progressive

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Does Car Insurance Cover A Rental Car: FAQ

Below are some frequently asked questions about rental car coverage:

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How We Rate Auto Insurers

Our review team extensively researches auto insurance providers to deliver informed and unbiased assessments of leading companies. We evaluate several key rating factors that are important to consumers to determine which providers are the best in the industry:

• Reliability: It’s important that an auto insurer is able to meet its claims obligations. Companies with a strong financial strength rating from AM Best score best in this category. Established insurers with a long history of reliable service also receive positive marks.
• Availability: Insurance companies that offer wider availability to consumers in terms of state availability and few eligibility requirements are more likely to meet consumer needs.
• Coverage: To determine our coverage score, we look at the number of coverage options available as well as coverage limits and deductible options. Our ratings also take into account additional services and benefits like roadside assistance.
• Pricing: Cost can be difficult to compare between insurers because so many factors impact annual premiums. The cheapest insurer for one driver may not be the cheapest for another. To determine our cost score, we look at insurance rate estimates generated by Quadrant Information Services, discount opportunities, and consumer reports.
• Service: We comb through customer reviews on sites like the Better Business Bureau (BBB) to learn about customer experiences. Insurers with a low volume of complaints score well in this area. We also consider the claims process, giving higher ratings to car insurance providers that offer a smooth experience.
• Technology: Providers with an online quote tool, easy-to-use claims app and a usage-based insurance app score best in this category.

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