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Does Car Insurance Cover Rentals?

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If you have full coverage car insurance, you would most likely be covered if you got into an accident with a rental car. In this article we'll discuss the type of coverage you should equip yourself with when hitting the road with a rental.

Do You Need Rental Car Insurance?

You do not need to buy insurance coverage from a Hertz, Avis, or other rental car company if you have the coverages in the below list. Typically, your existing plans should cover you, unless you want more protection on the road.

  • Liability car insurance
  • Collision and Comprehensive coverage
  • Personal Injury Protection, or MedPay or Health insurance
  • Renters or Homeowners insurance

Liability

Your own bodily injury and property damage liability coverage will give you financial responsibility should you be the cause of a damaging accident. So if you have an active auto policy, you are free to waive the Liability Coverage insurance from the rental company.

Collision and Comprehensive

Your collision and comprehensive insurance should also apply to your rental vehicle if you were to damage it in any way. We advice you check with your policy however just to be sure, as it may change between individual policies. When you confirm you are in the clear, then you can waive the Loss Damage Waiver (LDW) the rental company offers.

Just remember though that you are still on the hook for any deductibles you have on your collision and comprehensive coverage. We discuss why those with high deductibles might want to consider getting the LDW more below. Lastly, we also recommend you rent a car of similar value to the one you normally drive. If you end up crashing a really expensive rental car, your insurer can make the case of not needing to cover it because your premiums don't reflect the value of the car.

Personal Injury Protection, or MedPay or Health Insurance

Next, having personal injury protection, MedPay or a reliable health insurance plan ensures there is a quick way to pay for medical expenses should you be injured in an accident. If you are renting a car it is likely you are traveling away from home, and possibly in another state, so having a health plan that can pay for your expenses right away would be beneficial.

It can take a while until you see reimbursement from another driver's insurance, which can be made even more burdensome if the accident happened across state lines. So if you have either of those coverages, you can waive the Personal Accident Insurance the rental company will offer.

Renters and Homeowners

Lastly, having renters or homeowners insurance to protect your valuables allows you to skip out on the rental company's Personal Effects Coverage. A standard homeowners or renters policy will cover your personal possessions should your stuff be stolen during your time with the rental car. However, if you plan on driving without valuables, you can just skip out on the Personal Effects Coverage anyway.

When Should You Get Rental Car Insurance Through the Rental Company?

There are a few situations where you may be better off opting for the rental car company's insurance online or at the counter--even if you have car insurance already. The first circumstance is for drivers with a high deductible on their collision insurance who want extra peace of mind. A Loss Damage Waiver usually only costs around $9 to $15 per day. Compared to a $1,000 deductible however, you would actually end up paying way more than the cost of the Loss Damage Waiver. Not to mention, filing a claim would also cause your rates to go up (especially if you already had an accident), costing you more money in the long run. We would recommend if you are only renting the car for a few days, and have a high deductible, that you just buy the Loss Damage Waiver.

If you do not have your own auto policy, you need to buy the Liability Coverage in order to legally drive your rental. We've found the cost to range between $7 and $15 per day. We would also recommend getting Personal Accident Insurance through the company if your health insurance won't cover you in the event of an accident.

Lastly, if you are driving a rental in Mexico or any other country beside Canada, you should get the insurance your rental company offers you. American car insurance is not recognized in Mexico nor anywhere else beside Canada. If you were to crash in one of those countries, you would be liable for the entire cost of the accident. Be sure you are getting the rental in the country you intend on driving in however. Getting the rental in America, then driving over to Mexico for example would leave you in the same situation as going with your own insurance plan.

Rental Car Insurance with Your Credit Card

Another option to avoid the rental company's insurance is to use your credit card. Each major credit card provider offers certain cards that come with rental car insurance--so long as you pay for the car with the credit card. There are a few important things to note however. For one, the insurance your credit card provides is equivalent to the Loss Damage Waiver of the rental car company and that's it. The insurance from the credit card does not come with liability insurance, so you will need to either buy the rental company's or have your own auto policy.

Furthermore, the limit on the cards may also be capped somewhere between $25,000 and $50,000. Damage to most standard cars shouldn't exceed $50,000--even if you total it--but you should keep in mind how much you are covered for when choosing your rental. Finally, some cards may also not offer protection if the rental car gets stolen. We recommend you look up the terms and conditions of your specific credit card to see if the coverage it provides will be enough for your trip.

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