Rental Car Insurance

Rental Car Auto Insurance – When Do You Need It?

While rental car companies speed our business and vacation travel by making it quick and easy to pick up a ride, it often comes at a cost if you buy rental car auto insurance that you may not need. 

“The coverage from the car rental places is usually pretty decent; it’s just typically very expensive,” says Larry Lubell, president of Urban Insurance Agency in Chicago. “For the most part, liability coverage follows the driver, but the physical damage coverage follows the rental car. So if I wreck a rental, my liability for the damage I do to other people is covered. But the rental car is not covered. The liability will transfer over, but the comprehensive and collision coverage rarely will.”

Key to saving on rental car auto insurance is knowing your own coverage before you go. “It’s not always practical to try and make your insurance fit the need, especially if you have minimum coverage to begin with,” Lubell adds.

4 tips to know if you need rental car auto insurance

  1. Get to know the auto insurance coverage you already have.
  2. Verify what your credit card offers.
  3. Consider supplementary rental car auto insurance coverage.
  4. Don’t overlook ride-sharing options.

Being familiar with your auto, homeowners and even health insurance, as well as perks offered by your credit card company, can save you a bundle by avoiding duplicate coverage.

Here are four tips to know what rental car auto insurance you need and how to use your existing coverage to cut the cost of insuring a rental car.

1. Get to know the auto insurance coverage you already have.

Generally speaking, your state’s minimum liability coverage and deductions will apply to damages you cause to your rental car. However, coverage may vary for business travel.

If you have collision and comprehensive policies, these may also apply if your rental car gets stolen or is damaged. State laws vary, however, so be sure to check with your insurance agent first.

In addition, your homeowners or home renters insurance typically covers any of your personal belongings that are stolen or damaged. And your health insurance would provide coverage for any injuries you sustain in a rental car wreck.

2. Verify what your credit card offers.

Before you rent, quiz your credit card provider about the specifics of their complimentary rental car auto insurance coverage. At the very least, you’ll have to rent the car in your own name and pay for it with their plastic to qualify.

Lubell says in most cases, card brands only work with major rental car companies (Avis, Enterprise, Hertz, etc.) and will likely require certain auto coverages from you. “They’re not adding their coverage onto liability-only policies,” he says. “It will only be if you have a full-coverage policy.”

TAKE THE QUIZ: Factors That Affect Auto Insurance: Nature Edition

3. Consider supplementary rental car auto insurance coverage.

Rental car companies insure their own fleet, but leave it up to you to fill in the holes in your personal coverage. To help you do so, rental companies offer what are technically not insurance policies but waivers. That’s because they result from the rental company waiving their right to hold you responsible for certain types of losses.

Here are four supplemental policies that the Insurance Information Institute suggests to protect your rental ride:

  • Loss Damage Waiver: This non-insurance product, which waives you of responsibility should your rental car be damaged or stolen, is a popular option for those with minimal personal auto coverage and non-car-owners with no auto insurance. Consider it if you have little or no collision and comprehensive coverage.
  • Liability Insurance: If you cause an accident, liability coverage is essential, which is why states require certain minimum liability coverage for all vehicle owners. If yours is a little lean or you have no personal auto insurance at all, this is a recommended minimum. A non-owner version can be a good choice for non-car-owners who frequently rent.
  • Personal Accident Insurance: If you are injured in an accident involving your rental car, you may be faced with substantial ambulance and medical bills. Perform a quick check of your health insurance and the personal injury protection (PIP) on your auto policy. This can help determine if this rental protection beats or can work with your existing medical coverage.
  • Personal Effects Coverage: Your homeowners or home rental insurance will typically cover items stolen from your vehicle, including rental cars. If it doesn’t, this can temporarily fill in the gap in your coverage.

4. Don’t overlook ride-sharing options.

Ride-sharing programs like ZipCar and peer-to-peer rental services like Turo typically come with some rental protection included in their fees. Some ride-sharing programs charge a set fee for accidents or theft as stated in their contracts. Peer-to-peer services offer a broad range of insurance options from which to fill the coverage gaps in your own policy.

Best bet? Compare what’s included and what’s missing from your ride-share program and purchase the appropriate policies or waivers to refine your coverage.

SEE ALSO: Do You Need to Insure a Car You Don’t Drive?