Does Your Car Insurance Cover Rental Cars?

Rental car insurance is necessary to protect you and others during any incident that involves a rental car. The main types of coverage include:

• Protection for damages during the rental, where rental car companies charge you for fixing the damaged vehicle. 
• Coverage when the vehicle is stolen or attempted to be stolen. 
• Third-party coverage to keep you protected when another person or vehicle is involved in an incident.

A lot of people who have some type of insurance will have coverage for their rental car too. For example, if you have a valid, existing policy on your personal car, any car you rent will also be protected. This is provided you are using the rental car for personal use when on vacation and not for business use during a work trip. 

Also worth noting is that your personal car insurance may not fully protect you during a rental car incident. A ‘loss of use’ fee may be charged regardless of whether you have rental car coverage or not, as this is charged as a loss of income from the rental car company. 

How to check if your insurance covers rental cars

Your personal car insurance policy will explain the type of insurance you have when renting a vehicle. Take a look through the contract agreement and find the section on rental cars. The insurer will have provided you with your policy document online or via mail when you took your policy out. If you do not have access to your policy document then contact your insurer and they will send it via mail, electronically, or they will simply explain how your rental car coverage works over the phone. 

If you have liability and comprehensive insurance on your personal vehicle then at minimum most insurers will have you covered for rental cars within the US. A rule of thumb also applies where the value of any vehicle you rent out is the same or lower than your personal vehicle, then most insurers will have you covered for the rental car.

If you are taking out a policy with a rental car company, then you are highly protected during an incident. These are the three main types of coverage you get when opting for rental car insurance.

Collision Damage Waiver

Safeguard your rented vehicle against exterior damage with a collision damage waiver (CDW). The deductible amount varies but generally falls between $500 and $4,000. Remember, CDW only covers bodywork, so additional coverage is recommended for windows, wheels, and interior damage.

Theft Protection

Defend against theft attempts with theft protection (TP). TP covers stolen cars and damage resulting from break-in attempts. It typically includes a deductible, ranging from $500 to $4,000. In the US, this coverage may be referred to as a loss damage waiver (LDW), combining CDW and TP.

Third-Party Liability 

Ensure you're protected if you damage something other than the rental car through third-party liability (TPL). TPL doesn't cover the rental car itself but covers damages to external property. TPL often has a limit on payouts and doesn't require a deductible.

Whether you should get rental car insurance on top of your existing policy is up to you. If you need to weigh your options, then consider these points before taking out rental car insurance.

• Evaluate existing coverage: Check if your personal car insurance policy already covers rental cars or if there's an overlap with other insurance policies like health or homeowners insurance. If your existing coverage is sufficient, rental car insurance may not be necessary.
• Assess coverage gaps: If your personal policy lacks certain coverage types, such as collision or comprehensive insurance, renting from the car company and purchasing the Collision Damage Waiver (CDW) could be beneficial.
• Shop around: Before heading to the rental car counter, explore other insurance providers for better rental car insurance prices. Compare options to ensure you get the best deal.
• Consider circumstances: Various factors may influence your decision, such as renting an expensive vehicle, having high deductibles or limited liability coverage, avoiding claims on your personal policy, lacking collision and comprehensive coverage, and traveling outside the US and Canada.
• Balance savings and peace of mind: Evaluate the risks and costs associated with relying solely on personal insurance versus purchasing rental car insurance. Consider the length of the trip and your comfort level to make an informed choice.

Rental car insurance alternatives are available to provide coverage beyond what the rental car company offers. Consider these options before heading to the counter:

Credit card coverage

Many credit cards provide rental car insurance, either as primary or secondary coverage. Primary coverage pays out claims first, eliminating the need to involve your car insurance company or pay a deductible. 

Secondary coverage pays the remaining amount not covered by your car insurance, including reimbursement for fees. If you are ever unsure about rental car insurance then contact your credit card company for specific coverage information, rules, and restrictions.

Health insurance

If you're injured in a car accident, your health insurance can cover medical expenses within the US, subject to deductibles, copays, and coinsurance.

Home, condo, and renters insurance

These policies cover personal belongings, even if stolen from a rental car. For instance, if your laptop is stolen, you can file a claim under your homeowners' insurance.

Roadside assistance insurance

Available through car insurance companies, credit cards, or auto clubs like AAA, this coverage extends to rental cars and includes services like battery jump-starts, flat tire assistance, and lockout assistance.

Third-party rental insurance

Some companies offer standalone rental car insurance policies at potentially lower costs than those from the rental car company. Compare quotes in advance.

Travel insurance

Certain travel insurance plans include limited coverage for rental cars, typically for damages and roadside assistance but excluding liability coverage. Check the details of your travel insurance policy.

Umbrella insurance

If you exceed the liability limits of your other policies (e.g., auto insurance or home insurance) due to a rental car accident, umbrella insurance can cover the excess amount, up to your policy limits.

If you're wondering if your car insurance covers rental cars, it's important to check your policy for specific coverage details. While some personal car insurance policies may provide coverage for rental cars, there may be limitations and exclusions. As an alternative to dealing with complex insurance policies, consider a FINN car subscription.