Does Car Insurance Cover Me Driving a Rental Car?
Does Car Insurance Cover Me Driving a Rental Car?
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In most cases, your own car insurance policy applies when renting a car, so you may not need to buy additional protection from the rental car company. We’ll compare the types of protection rental companies offer with what's available from an insurer, and which gaps you might need to fill.
Note: this guide is about using your own car insurance to protect the car you've rented at a company like Enterprise, Hertz or Avis. For the car insurance coverage that pays for a rental car while your vehicle is being repaired, see our guide on rental car reimbursement coverage.
What does my own car insurance already cover?
Most of the common types of rental car protection are similar or identical to coverages available on a regular car insurance policy, and coverages you have for your own vehicle generally translate to rental cars as well.
If you have liability, collision and comprehensive insurance on your own vehicle, you will already be protected, at least up to the policy's limits, for most of the coverages that are typically offered by rental companies.
In addition, most renters or homeowners insurance policies cover personal items that could be stolen from your rental. You should review your policies before deciding to purchase coverage at the rental counter.
Policies rental companies offer
Car insurance equivalent
|Liability insurance supplement||Bodily injury and property damage liability coverage|
|Collision damage waiver (CDW)/Loss damage waiver (LDW)||Comprehensive and collision coverages|
|Personal accident insurance||Personal injury protection and health insurance|
|Personal effects coverage||Homeowners or renters insurance personal property coverage|
Liability insurance supplement vs. your liability insurance
Liability insurance for bodily injury and property damage is almost always required nationwide, so if you have car insurance, you're likely already covered. Additionally, car rental companies are required by law to include at least the state minimum coverage, so you don't have to worry about driving off the lot without coverage.
When deciding whether to purchase a rental company's liability insurance supplement, consider the fact that you may be driving more while you're on vacation than you would normally, in an unfamiliar car on unfamiliar roads. We recommend carrying at least $25,000 of bodily liability insurance per person, $50,000 of bodily liability per accident and $25,000 of property liability (25/50/25), as lower limits may not cover the full costs of a crash.
Collision damage waiver/loss damage waiver vs. comprehensive and collision
If you own collision and comprehensive coverage on your personal auto insurance policy, you can usually choose to decline this waiver, which typically costs about $9 to $19 per day in the U.S. But, your collision and comprehensive insurance limits should ideally cover up to the actual cash value (ACV) of the rental vehicle for adequate protection.
Renting luxury vehicles
Your comprehensive and collision coverages cover the cost of repairs to a vehicle similar to your own. But if you're renting an expensive car like a convertible or luxury car, your coverage might not pay for the full cost of repair after an accident.
The collision or loss damage waiver (CDW/LDW) relieves you of financial responsibility for damage done to the rental vehicle. It also eliminates the fee a rental company might otherwise charge you for the loss of use of their vehicle while it is being repaired. Your collision and comprehensive policies often cover these costs, depending on the type of damage, but you should check your policy to make sure it doesn't exclude loss-of-use coverage for a rental vehicle.
Personal accident insurance vs. PIP, medical payments and health insurance
If you already have medical payments, no-fault or personal injury protection through your auto insurance policy, or adequate personal health insurance, you may safely decline the personal accident insurance that rental companies offer. This covers the medical fees incurred due to a car accident.
Depending on where you live, you may be required to carry such insurance on your personal policy. Currently, 15 states require PIP coverage to be included with auto insurance policies. Where PIP coverage isn’t required, you may buy it.
Alternatively, you can turn to your health insurance to cover your medical bills from an accident. Since these costs can easily amount to tens or hundreds of thousands of dollars, be sure your health insurance policy is adequate to protect you. Insured drivers from these 15 states have at least some overlapping coverage from their PIP policies.
States that require personal injury protection coverage
Minimum PIP Limits
Personal effects coverage
If you have renters or homeowners insurance, you can safely decline this coverage. Personal effects coverage reimburses you for personal items that may be stolen from your rental vehicle, but renters or homeowners insurance policies typically already include this coverage. For example, State Farm includes off-premises loss in their renters insurance policy worldwide for 16 types of peril (fire, theft, explosions, etc.).
Which insurers cover rental cars?
Most car insurers include rental car coverage in their policies. All 10 of the biggest insurers nationally cover rental cars in most cases:
- State Farm
- Liberty Mutual
- American Family
However, you should check the language of your policy or speak with your insurance agent to be certain you're covered.
Types of rental insurance covered through credit cards
In addition to personal auto insurance and renters or homeowners insurance, many major credit cards offer supplemental coverage if you use that card to pay the full balance of the rental.
However, this insurance is sometimes secondary, meaning it applies only after your personal insurance plans are applied. Further, it often comes with other caveats, such as a requirement that you decline the CDW offered by the rental policy.
For example, eligible Mastercards only provide coverage if the renter declines the rental company's CDW, the rental does not exceed 15 days and all other insurance policies available to the driver have been exhausted. In addition, Mastercard excludes from coverage all trucks, full-size vans and antique vehicles. Carefully examine your card's benefits and exclusions before relying on it for car rental insurance.
When should I buy rental insurance, even if I'm already covered?
There are a few cases when you might want to purchase insurance from a rental company, even if you're already covered by your personal policies:
- You only have liability insurance.
- You only have the state-mandated minimum liability insurance.
- Your personal auto insurance policies have high deductibles.
- You're an at-risk driver or you want to protect your personal auto policy premiums.
- You have very low limits on your collision or comprehensive plans.
If you only have liability insurance, we recommend purchasing the collision damage waiver (CDW). Your liability insurance will help protect you if you damage another vehicle, but it won't cover any of the costs of repairing your rental vehicle. Without a CDW or personal collision and comprehensive insurance, you'd be responsible for any repair costs and loss-of-use fees you incur on your rental, even if you weren't at fault for the accident.
If you only have the state-mandated minimum liability insurance, you might want to opt for additional liability insurance from the rental company to protect yourself from the costs of damaging another vehicle and its passengers. For example, Arizona's state-mandated minimum bodily injury liability is just $15,000 per person. If that's the amount you carry on your policy, and you cause an accident that results in $200,000 in medical expenses for the other driver, you'd be responsible for the difference of $185,000. Additional liability protection would allow you to eliminate the risk of such a gap.
If your personal auto insurance policies have high deductibles and you're worried about having to pay for minor damage, such as dings or scratches on your rental, the CDW will relieve you from responsibility for these repairs. For example, repairing a scratch on a car can cost anywhere from $150 to $900. On your own vehicle, you can choose to turn a blind eye to minor defects. The rental company, by contrast, may not do so, and, with a high deductible on your policy, you'd wind up paying out-of-pocket for any needed repairs. Just make sure any CDW you buy doesn't come with its own comparable deductible.
If you're an at-risk driver or you want to protect your personal auto policy premiums, you might want to purchase their CDW, liability or personal accident insurance. This is especially true for drivers who have already had an at-fault claim in the last three years and don't want to see another severe increase in their auto insurance premiums. Drivers who make their first at-fault claim will likely see an average premium increase of 10% to 25% for three years.
If that driver makes a second claim within that time period, another increase of at least 45% is probable. Those hikes in premium could quickly eclipse any amount you spend on supplemental insurance from a rental company. However, no claim made on an insurance policy purchased from a rental company will affect your personal insurance premiums, since the policy is underwritten by a separate insurer.
If your personal vehicle is much less valuable than your rental, your personal collision and comprehensive policies might have low limits on the maximum coverage they provide. For example, let's say you drive a standard 2009 Nissan Altima in good condition with 100,000 miles on its odometer. The actual cash value (ACV) of your car is about $2,700. Any collision and comprehensive policies you have on the car would likely cover you only up to that amount, less the deductible.
Now let's say you drove off the rental company’s lot in a 2016 BMW 2 Series with 10,000 miles on its odometer. The ACV of that vehicle is about $22,000. Were you to get into an accident that totaled the BMW, your personal policy might only cover up to $2,700 of the damage, leaving you on the hook for around $20,000 after the deductible is applied. If your rental car is much more valuable than your personal vehicle, it's wise to purchase the CDW to eliminate the potential for such financial responsibility.
Frequently asked questions
Will my car insurance protect my rental car?
In most cases, yes, the coverages you have on your own personal car will also apply to a rental car. But if you have a liability-only policy, you won't be covered for damage to the rental car.
Will my credit card insure my rental car?
Many credit cards, especially travel cards, have a damage waiver that pays for damage to your rental car while you drive it, as well as trip interruption coverage. However, these waivers don't provide coverage for liability or your own medical bills, so make sure you're fully protected before you drive.
Should I buy additional rental car coverage, even if I'm already protected?
It may be worth buying supplemental coverage from your rental car provider, even if you're already covered. While on vacation, you're driving a new car and likely in an unfamiliar area, so the potential for things to go wrong is higher than when you're at home.
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