Not owning a car typically negates the need for auto insurance. However, being covered by an insurance policy is a good idea if you frequently rent vehicles for travel. An uninsured driver faces financial risks if the rental vehicle is damaged in their care, and the best way to prevent such situations is with a rental car insurance policy. This type of policy is beneficial even for the insured car owner who rents vehicles if their existing auto insurance policy doesn’t offer certain coverage options for rental cars.
What is Covered by Rental Company Policy Options
Are you wondering if rental car insurance is worth it? The answer is yes, regardless of whether you own a car or have primary auto insurance. Although some of the options in a rental company policy might already be covered by comprehensive or collision insurance, the limits might be low in the latter.
Loss-damage waiver
Rental car insurance absolves you of any financial risk or responsibility if the vehicle is damaged or stolen while in your use. The policy also covers you against loss of use when the rental company is unable to rent out the car because of the damages.
Liability coverage
This option protects you in case you injure another person or damage personal property while driving the rental vehicle.
Personal accident insurance
This feature helps pay the medical costs if you or your passengers are injured while in the rental vehicle.
Personal property coverage
This is a useful coverage option if you drive your rental car to dense tourist destinations where your belongings are at risk of theft. In case your personal property is stolen from the car, the rental company policy will have you covered.
What is Covered by Your Primary Insurance
An existing car owner with an auto insurance policy might wonder if it’s necessary to buy rental car insurance. Here is a brief breakdown of what is covered by the primary insurance and when buying additional rental insurance makes sense.
Loss-damage waiver
If you have only the mandatory minimum liability coverage, you aren’t protected against loss or damage to your own vehicle or a rental car. Loss-damage waivers are available if you have comprehensive and collision coverage.
Liability coverage
The basic liability coverage mandated by law in most states often might not be enough to protect you from big financial risks in case of serious damage. If you have bare-bones coverage, seriously consider supplementing it with rental insurance.
Personal accident insurance
Your auto insurance will not pay your medical bills if you or your passengers are injured while in the vehicle. These costs will more likely be covered by your health insurance, and depending on your deductible, it is often smart to get add-on coverage from the rental company.
Personal property coverage
If your personal property is stolen or damaged, you are usually covered by homeowners or renter’s insurance. A rental company policy is more beneficial than primary car insurance in these scenarios.
Average Cost for Each Available Rental Insurance Option
Many factors impact how much you’ll spend on rental car insurance, such as your existing coverage, where you are and the type of vehicle you’re renting. Here are some price ranges to get an idea of what to expect at the rental counter.
- Collision Damage Waiver (CDW): Varies by location and type of vehicle
- Supplemental Liability Protection (SLP): $11.19 to $18 per day
- Personal Accident Insurance (PAI): $5.13 to $13 per day
- Personal Effects Coverage (PEC): $5.13 to $13 per day
Rental Car Insurance Coverage for International Travel
Your personal auto insurance or credit card insurance might not apply if you’re traveling abroad. When preparing for an international trip, call your auto insurance company and credit card to find out if your rental car is still covered. If you bought international travel insurance, it could include your rental car.
It’s always a good idea to check this before standing at a rental car counter in a foreign country. If the decision to rent a car was impulsive, you might be better off buying the international rental company’s rental car insurance just to be safe.
Buying Rental Car Insurance With Your Personal Credit Card
Credit cards offer secondary coverage on rental cars, stepping in to fill the gaps after you’ve filed a claim with your auto insurer. They’ll help pay towing fees, your auto insurance deductible and some rental car agency fees. You may be limited to where you can travel and qualify for these benefits. For example, you may not be covered when renting a car in a foreign country.
The best credit cards offer rental car perks automatically. If you know you’re going to be renting a car during your travels, call your credit card company in advance to gain a full understanding of what they offer. It will save you time compared to figuring it out while in line at the car rental counter.
When Should You Get Rental Car Insurance?
Car insurance isn’t cheap, and an insured driver might find a rental company policy to be an unnecessary expense. However, in the following situations, rental insurance is worth it.
- You are uninsured or have the bare minimum coverage: Getting a rental car insurance policy often becomes a necessity if you don’t have primary auto insurance or the coverage you have is the bare minimum. In such a case, without a rental company policy, you’re exposing yourself to major financial risks.
- You travel for business: If you frequently use rental cars for business trips, your personal insurance policy may not offer any coverage at all. If your company doesn’t cover rental car insurance, you may be better off purchasing one of your own.
- You are driving internationally: Your car insurance isn’t going to cover your rental vehicle if you are taking it outside the United States. Although your credit card might offer some coverage, it will be unlikely in most of the popular tourist destinations around the world, including Australia, Italy and Ireland.
- You want to protect your auto insurance rates from a surge: When your personal auto insurance covers a rental vehicle, expect an increase in premium if you file a claim. A separate car rental insurance prevents such a scenario.
Stand-Alone Rental Car Insurance
If your primary auto insurance policy doesn’t cover rental cars, your next option is to purchase insurance from the rental company itself. However, there are also standalone providers that offer rental car insurance. Shopping around for a standalone policy often gives you more control over the price and the coverage. A few such providers are:
- Allianz global assistance – Best coverage abroad.
- Bonzah – Easiest cancellation policy.
- Insure My Rental Car – Best online quote tool.
- Rental Cover – Most compatible with rental companies.
- Sure – Best mobile app.
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About the Authors
Lauren Ward is a personal finance writer who regularly covers consumer insurance products. Her work has appeared in a variety of online publications, including Bankrate and The Simple Dollar. She graduated from Georgetown University with a BA in Japanese.