Obtaining third-party insurance is an important aspect of renting a car. It may be beneficial to learn more about what third-party insurance entails and the extent of its coverage before booking your rental car. Let’s define third-party liability insurance to comprehend how it pertains to automobile rentals coverage in the event that you harm or damage someone else’s property while driving.
What Is Third-Party Rental Car Insurance?
Anyone renting a car must have third-party rental car insurance in case they harm or damage someone else’s property while driving. A third-party insurance policy in car rental can insure damage to anybody or anything other than the rental car and yourself. In the case of a collision, for example, it may cover damage to the other car and the passengers within it.
What Does Third-Party Rental Car Insurance Cover?
If a driver causes an accident, the third party rental car insurance would cover the following:
- The expense of any damage to a third party’s property — whether it’s a car, a fence, a laptop, or anything else
- The cost of any third party’s harm and damages, which might include medical bills, lost earnings, and more
- Third-party legal expenses (e.g. court fees or expert fees)
All of the above-mentioned might be quite costly, but the driver’s third-party rental car insurance will cover these expenses. On top of that, the rental company will also handle the paperwork. This is precisely why third-party rental car insurance is mandatory by law. Without the insurance, the driver would have to cover the charges themselves, which can be costly, complicated, and time-consuming.
What Does Third-Party Rental Car Insurance Not Cover?
In general, third-party rental car insurance doesn’t cover anything relating to the rental automobile itself, such as damage to the driver’s personal rental and automobile theft. It also includes the instances if the driver caused any damage to the car themselves, such as scratches on the car body and cracks on the windshield. There are many insurances available for this, including Loss Damage Waiver (LDW), Collision Damage Waiver (CDW), and Collision Damage Insurance (CDI), all of which may be purchased individually.
It might not cover anything if the driver violated the rental agreement’s terms and conditions or the applicable local laws. For instance, the driver might void the policy by driving off-road, driving while intoxicated, or allowing someone else to drive if their name isn’t on the rental agreement. If this occurs and an accident occurs, the insurance company will still payout for any third-party costs the driver is responsible for, but it may then initiate legal action against the driver to recover that money.
How Much Third-Party Rental Car Insurance Do You Need?
Cars are generally required by law to obtain third-party liability insurance. As a result, automobile rental firms ensure that their vehicles have the necessary insurance coverage. Nonetheless, the level of coverage needed by law might be extremely minimal. As a result, the coverage that comes with the automobile may not be enough in all situations. As a general rule, it’s always recommended to purchase additional insurance since it provides peace of mind when driving a rental automobile. What you can do is double-check the coverage of your existing insurance policies and see the extent of coverage provided by your usual automobile insurance. You typically have two options:
- Drive with the bare minimum of insurance. If you inflict additional harm to a third party, you must pay for it out of your own pocket.
- Alternatively, you might purchase ‘Supplemental Liability Insurance.’ This normally gives coverage of between $1,000,000 and $2,000,000.
Supplemental liability insurance often covers damage to other people’s property and the medical expenses for other people’s injuries in an accident for which you are legally liable. Because every state in the United States requires a minimum level of liability insurance on automobile insurance plans, you may already have liability coverage through your personal auto insurance. It is also often advisable to purchase an “umbrella liability insurance,” a low-cost policy that may be added to your insurance to give additional protection.
The amount paid by your insurer for a covered liability insurance claim is dependent on the policy limits you select. Each state requires drivers to acquire minimum coverage limits for bodily injury liability and property damage liability, but you may choose to obtain extra coverage. On your automobile insurance policy, you may notice these three liability coverage limits:
- Liability limit for property damage: This is the most your insurance will pay to repair the damage you cause to someone else’s property. The maximum payout would be limited to the amount you’ve specified.
- Limitation on bodily harm responsibility per person: This is the maximum payment for each individual harmed in an accident caused by you.
- Limitation on bodily harm liability per accident: This is the total amount your insurance will pay for all medical expenditures incurred as a result of a single accident in which you were at fault. It is critical to establish this limit at a level that is appropriate for you, as this may other people’s medical expenditures.
Do You Need an Additional Collision Damage Waiver?
The rental vehicle company’s collision damage waiver implies that if your rental automobile is stolen or damaged, you won’t have to fix or replace it. However, these exemptions often entail a deductible. It’s a good idea to get this form of rental automobile insurance. While your standard automobile rental insurance policy may offer collision coverage, it will almost always contain a deductible and may not cover all of the rental car company’s expenses, such as loss of use (the money lost when the car is still in the store).
Do your homework before you arrive at the rental vehicle desk. Examine your auto insurance and credit card coverage alternatives. When you encounter difficulties with your rental car, there is no need to worry. The FIXD app is always an option if you need some help troubleshooting an issue with your rental car while you’re on a trip.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.