Does my car insurance cover rental cars? You might ask yourself this question on occasions when you need a rental car, either because your vehicle is in the shop or you require transportation while on vacation. In many cases, your insurance policy will provide the same coverage for your rental vehicle as your standard insurance policy with the same deductibles. Some policies, however, restrict coverage on rental cars.
What Insurance Policies Provide Rental Car Coverage?
Image via Flickr by Hakan Dahlstrom
If you have full coverage, including liability, comprehensive, and collision insurance, on your personal vehicle, your policy likely provides rental car coverage up to your agreed-upon limits. If you have rental or homeowners insurance, it could also cover the theft of any items in the rental car.
When you rent a car, the rental company might offer coverage options that seem different from your current coverage, but most options have a personal policy counterpart. For example, a liability insurance supplement is the same as your personal policy’s bodily injury and property damage liability coverage. Rental accident insurance is the same as comprehensive and collision. Personal accident coverage is the same as your personal injury protection (PIP) and health insurance.
Your comprehensive collision coverage is designed to cover the cost of repairs for a vehicle similar to your own. In some cases, however, your insurance might exclude coverage for rental vehicles. This typically occurs when renting luxury cars, sports cars, or large passenger vans.
If you wreck a rental vehicle that is significantly more expensive than the car you own, you might be financially responsible for the extra repair costs your policy does not cover. You might also want to check your collision and comprehensive policy to ensure it covers loss of use, which would reimburse the rental company for the time it can’t use the vehicle due to repairs.
When renting a car, be aware of the personal injury protection coverage requirements for the state where you are driving. If you already have personal injury protection insurance on your policy, this should cover you in a rental car. If you don’t and are in a PIP state, you might have to rely on your personal health insurance to cover any medical costs. If your health insurance coverage is inadequate, consider purchasing rental car personal accident insurance.
Insurers That Cover Rental Cars
Several large insurance companies provide coverage for rental vehicles under your personal policy automatically or for an additional charge. Insurance companies that cover you in a rental car include:
- State Farm
- Liberty Mutual
- American Family
*Note that only military members and their families are eligible for USAA coverage.
When Should You Opt for Additional Rental Insurance?
While most insurance companies provide the same coverage for your rental car as they do your personal vehicle, in some cases it’s advisable to opt for additional rental insurance coverage. These include:
You Only Have Liability Insurance
Purchase a collision damage waiver if you only have liability coverage. Otherwise, your insurance will only cover the cost of damage to the other vehicle in the accident, and you’ll be on the hook to fix the rental car. The rental company can also charge you downtime costs while it can’t rent the vehicle out due to repairs.
You Have the State Minimum Requirements
Another instance when you might want to consider additional rental coverage is when you only carry the state-mandated minimum liability insurance. If you live in a state with a lower liability amount and are in an accident in a state with higher medical costs, you could end up with a hefty bill without additional liability protection.
You Have a High Deductible
Having a higher deductible might be an excellent reason to purchase additional car rental insurance. While you might not fix minor dents or dings on your personal car, a rental car company likely requires it. If you have a high deductible, you might be paying the cost out of pocket. With additional coverage, you won’t have to worry about paying for minor damage.
You Rent an Expensive Vehicle
Even if you’re not renting a luxury vehicle, consider additional coverage if the vehicle on your personal insurance policy is significantly less expensive than your rental car. Your insurance premiums are based on the cost of repairs for the vehicle it covers.
This means your insurer likely has a limit to how much it will pay for repairs. If you rent a more expensive vehicle to repair, you will most likely have to pay for some of the repair costs.
You Have At-Fault Accidents
If you’re considered an at-risk driver and already have one or more at-fault accidents on your record, you might want to purchase rental insurance to protect your personal premiums. Having rental coverage and getting into an at-fault accident will not affect your personal insurance.
If you get into an at-fault accident in a rental car and depend on your personal insurance for repairs, it could cause your rates to increase 10 to 25% over the next three years. Drivers who have had recent accidents can see a jump in premiums of almost 45% for additional infractions. It might be worth the cost of the insurance to prevent this potential increase.
Credit Card Rental Coverage
Some credit cards provide additional insurance coverage for rental vehicles if you use them to book the car. This is especially true with travel and corporate credit cards. This coverage provides insurance for the rental vehicle you drive as well as for trip interruption.
The only thing these policies don’t cover is your personal medical bills if you are in an accident, so make sure you have adequate health care coverage. Contact your credit card company for full coverage limits.
Most insurance companies provide the same coverage for a car you rent as the one you drive. It’s essential to understand your coverage limits to determine if you need more rental coverage to ensure adequate protection.
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.