What is rental car insurance?
Car rental insurance and car rental reimbursement insurance are 2 different things. Are you aware of the differences?
If you do not own a car, or if your car is currently being repaired in body shops, you can rent a car from car rental agencies for a few days or weeks. You will be charged a daily fee. If you are living in the USA, $66 is the daily average cost of renting a car. But, do you need to buy car insurance for your rented car?
The following is covered in this article.
Page Contents
Do you need rental car insurance?
Just like any car people drive, car rental insurance is a policy that protects you against the costs of damages that will likely occur to the rented vehicle. At the expiry of your renting period, you may be charged for any serious damages, tear and wear found on the rented vehicle.
Do you want to know the types of rental car insurance available today?
In this article, we shall explore car rental insurance, and we shall specifically answer in detail the question, Is my rental car covered by my insurance?
Alright, here we go.
When do I need car rental insurance?
Yes, you may at one time need rental car insurance. For instance;
- if you do not own a car but would like to rent it for a trip.
- If your standard car insurance does not cover car rental.
- If you have little coverage in your standard auto insurance.
- If you traveled overseas and would like to rent a car and drive yourself around.
What you should know is that you don’t need insurance to rent a car. This is because rental companies maintain minimum liability coverage on all the vehicles available for rental. Since most states require liability coverage before you are allowed to drive, you can walk into any rental agency, pay your initial deposits and drive away.
But if you are involved in an accident or losses not covered by the minimum liability coverage your vehicle already had, then be ready to pay for the expenses out of your pocket.
Some companies or states dictate minimum coverages required so you may need to do some research and see what laws applied where you live. You may need additional coverage on top of the minimum coverage your rented car already has.
what rental car insurance do I need?
If your liability coverage from standard auto insurance covers rental cars, then you do not need supplemental liability otherwise you need to buy this to cover the costs of losses/damages you are likely cause others.
Collision damage waiver. This is not insurance coverage but is a clause that lets you free in case you damage the rented vehicle. It is also offered by your car rental agency. If you already bought collision and comprehensive coverages from your standard auto insurance, there is no need to buy this coverage from the car rental agency.
Personal accident insurance. You or any of your passengers are at risk of getting injured while driving your rented car. Should the unpreparedness happen this coverage sold by car rental agencies will step in to cover you and the passengers. You do not need to buy this coverage if you already own robust health insurance, personal injury protection, or any medical payment coverage.
Personal effects insurance coverage.
Your personal belongings are at risk of being stolen from inside your rented vehicle. Things like laptops, jewels, cell phones, clothes, and other valuables that could be stolen are all covered by personal effects insurance. This coverage is also sold by your car rental agency. Do not buy this if you already own renters insurance or homeowners insurance.
So as you can see guys, you may or may not need to buy rental car insurance because your standard auto insurance should be already covering you. But, you need to call your insurance broker or company and get confirmation before declining those policies sold by your car rental agency.
In some countries or states, standard auto insurance does not extend to cover rental cars so you may need to dig deeper to know or buy stand-alone policies from a third party.
Rental car insurance liability.
Every country or state has its minimum insurance coverage before you are allowed to drive your car. All states will ask you to buy only liability coverage while others add in collision coverage. All rental cars just like other owned cars require such minimum insurance coverage before you drive. You have choices of;
- Buying the coverage from the very car rental company.
- You can use your standard auto insurance policy to cover your rental car.
- You can also buy coverage from any third-party company.
Supplemental liability car insurance coverage sold by your rental agency works the same way as your standard liability auto insurance coverage. You can still buy it to increase coverage in case your stand auto coverage is not enough to cover all your insurance needs.
Is lease car insurance more expensive?
When financing your car, insurance requirements will not be as high as a leased car. This is because the lessor company owns the car full and wants to protect it from accidents and damages, while you partly own the car if you took a loan against it.
If you own the car you are driving, it’s up to you either buy extra insurance coverage or go with the state’s minimum coverage. This makes it cheaper compared to when your car is leased or financed through loans.
Leased cars are expensive to insure because the lessor company will ask you to buy full insurance coverage like liability, comprehensive, and collision coverage. The lessor company will also dictate the minimum coverage for each of the above-mentioned policies.
Some lessor companies also require underinsured/uninsured motorist coverage and gap insurance coverage.
What is gap insurance?
If your leased car is totaled through a collision policy, the insurance company pays the actual cash value or market value of the car as estimated just before the accident.
Since cars depreciate as soon as you drive out of the lot, what the car fetches is a low amount of money compared to the brand new versions of the same vehicle. Let’s say your leased car A cost price is $20000. If the car is totaled after 5 years and fetches $15000, the lessor company will be counting $5000 in losses due to depreciation and average tear ad wear. Gap insurance coverage steps in to cover $5000 losses saving you or the company from losses.
What is the Cost of rental car insurance?
Just like standard insurance coverage, rental car insurance is not cheap. You will need to act wisely and also think about either buying the coverage from the rental agency or using your standard auto insurance.
From simple research I carried out online, below are estimates for rental car insurance. I only cover the policy that is being sold by a car rental agency.
- The cost of supplemental liability coverage in the USA is approximately $8 to $12 per day, averaging $300 monthly.
- Buying a collision or loss damage waiver is the most expensive with many companies quoting $20 to $30 daily.
- The cost of personal accident coverage is approximately $3 daily.
- Personal effects coverage is the cheapest at $2 daily.
- Summing it up, rental car insurance will on average cost you between $33 and $47 per day. This is not cheap, right?
Before deciding to buy car rental insurance from the rental agency, I recommend you call your auto/car insurance company first and find out if your coverage extends to cover rented cars or not. Spending $33 to $47 daily blindly is not cool whatsoever!
Should I buy additional rental car coverage, even if I'm already protected?
Extra rental car insurance is expensive especially if you already have standard car insurance coverage on your vehicles. But, if the budget if not as tight, extra caution is not bad. For instance, you need to buy extra car rental coverage if;
- The car you rented is brand new. It usually costs a fortune to buy new cars, so you may need that extra coverage to protect you financially in case the car is totaled or high costs for repairs.
- You need this coverage if you are on vacation. You will be driving in an unfamiliar locality and anything like a collision could occur.
- Filing even a single claim or getting a ticket raises your insurance premiums. If you want to protect your standard insurance rates, better buy car rental insurance.
- If your car insurance has higher deductibles, then buying car rental insurance saves you from paying such astronomical amounts in case of an accident. You do not pay the deductible if you claim against rental car insurance coverages.
- As a way to save money, many drivers go for only the state’s minimum liability coverage. should the accident occur, you may not have enough liability coverage to compensate the person whose car you damaged or pay medical bills in case of injuries. If this is true for you, better buy supplemental liability coverage.
- Very few people are fully covered. You will be fully covered if you purchase at least collision coverage, liability, and comprehensive car insurance policies. If you are not fully covered on your personal car insurance, consider going full on your rented vehicle.
Is rental car insurance worth it?
Well, this depends on what coverage you need. If you have enough coverage on your standard insurance, opting out of rental car insurance is not bad. The problem is that policies differ from country to country and or from state to state. In some countries or states, your standard car insurance may not be covering a rented car making it worth it.
According to my opinion, buying car rental insurance can easily double your total car insurance costs, so it’s damn expensive. Think twice and decide if you need it or not. Since the car you rented already carries liability insurance bought by the car rental agency, buying extra coverage solely depends on what you want.
At its minimum, you do not need to buy any insurance coverage, nor do you need to own personal auto coverage to rent a car.
Cheapest car rental insurance.
According to way.com, the cheapest rental car insurance is Budget, at $30 daily, Alamo Rent A Car charges $44 a day, National Car Rental at daily $44, and others you can access by visiting their website.
How long will insurance pay for the rental car?
Yes, your standard insurance could be extended to cover your rented car. Hope you guys know rental car insurance is different from rental car reimbursement coverage.
Rental car reimbursement pays for the costs of hiring a car while your car is being repaired in body shops. It goes into effect after an accident.
Most car insurance companies will pay for your rented car(car rent reimbursement coverage) for up to 30 days though this varies from company to company. Since you can have a rented car from a rental agency for up to 12 months, you should ask your car insurance company and know how long they will cover you.
If you bought your coverage from the car rental agency, the coverage period will be negotiated within the deal. The only challenge is when you are using your standard car insurance to cover your rented car.
Is it necessary to buy rental car insurance?
Do not always assume that your personal policy will cover your rented car. Many of us only buy our state’s minimum required coverage and go home and relax only to be caught unprepared in such scenarios. Also, in the USA, statistics show that at least more than 10-14% of drivers are uninsured so you are likely to get involved in car accidents with someone with either no insurance or some guy with insufficient insurance coverage.
Suing someone with absolutely nothing to compensate for your losses is useless since you can not squeeze water out of the stone. Review the amount of coverage you have on your auto coverage and again go deeper and find out if such coverage extends to cover your rented car.
In most cases, you may need car rental insurance in the following scenarios.
- Your personal car insurance policies do not cover car rentals.
- If you are the guy who neither owns a car nor owns any car insurance.
- Some people are fond of renting cars several times more than normal people.
- Personal car insurance carries deductibles. Consider buying car rental insurance if you want to avoid paying your deductibles. Some people choose higher deductibles as a way of paying cheaper prices.
- If you traveled abroad or in another country where your personal coverage does not cover your rental car.
Does my credit card cover rental car insurance?
Yes, your credit card is likely to be covering your rental car but you need to be sure of that. Call your credit card company and confirm with them since some credit cards carry no such services.
Your credit card company will cover you only if you charge your car rental fee on your card. Your credit card company will not cover your rented car if you pay cash or use other means of payment.
A simple google search should give you lists of all credit cards that cover rented cars, or else, call and get word of mouth from your issuing company.
How much is full coverage insurance on a rental car?
You will need the following coverage for your rental car to be considered fully covered.
- Coverage for when you are the at-fault driver in a car accident. You may be asked to pay for car damage costs, medical bills, and other property damages.
- Coverage for your rented car. Coverages like comprehensive and collision work better.
- You may need to ask those people at the car rental agency counter for any additional coverages they may require you to buy.
Does progressive cover rental cars?
Does my Geico insurance cover rental cars?
Yes, congratulations. Your Geico personal car insurance covers your car rentals. But make sure the car you intend to rent has less value compared to the car Geico is covering.
If you drive a 20-year-old banger but want to rent that cozy full-size car with the latest technology, then be prepared to top up on your Geico car coverage should you get involved in a road traffic accident.
In such cases, I recommend you consider buying extra coverage from your car rental agency. You may also consider renting a cheaper and more affordable car if you do not have enough money in your savings.
In summary, yes your rental car should be covered by your personal insurance, but you may need to buy additional coverage if you think your coverage is not enough, or the policies you bought do not extend coverage to your car rentals.
