Eli Porter
Planning on renting a car this weekend? Before you give your credit card to the rental agent, here’s something that might catch you off guard: the majority of Americans unknowingly have rental car insurance. Knowing what your existing policy entails might help you avoid spending an extra $15 to $30 per day on additional rental car insurance coverage.
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Is My Car Insurance Effective on Rental Cars?
The truth is, your personal auto insurance policy will generally provide coverage for a rental car. However, the extent of coverage depends largely upon the kind of insurance policy you have. We will explain it to you in simple steps so you will exactly know where you stand with your insurance.
How Your Current Policy Applies to Rental Cars
Imagine it like this. Usually, the insurance you have on your car is the insurance you carry with you when you drive a rental car for personal use. If you possess full coverage, then you’re well covered. But if you only have the state minimum, then your coverage is quite limited.
Usually, these are the points that get transferred from your personal policy to the rental one:
- Liability coverage takes care of bodily injury and property damage you may cause to others in an accident.
- Collision coverage takes care of the damage to the rental car, whether or not you are responsible for the accident.
- Comprehensive coverage guards the rental car against theft, fire, flood, or vandalism
- Personal Injury Protection (PIP) takes care of healthcare-related expenses for you and your passengers, depending on your state.
- Uninsured Motorist Coverage stands as your protection if the other party has no insurance coverage.
A point to consider is that this kind of insurance usually applies only to personal use rentals. If you are renting a vehicle to be used for work or business travel, your personal auto policy may not provide any coverage. You must check this with your insurance provider before you get your rental vehicle.
What Is Not Covered by Your Personal Policy
If you have the vehicle covered fully, you might be left with only a few of the uncovered parts. The lack of coverage is usually revealed only at the claims desk.
- Loss of use fees are the rental car company’s charges for every day that their car is in a repair shop due to the accident. Such charges are almost never included in your personal policy.
- Administrative fees are fixed charges that local agencies impose when they proceed with paperwork in relation to a claim. These charges are almost completely excluded from personal auto coverage.
- Diminished value is the decline of the car’s value just because it was involved in an accident. Rental companies’ fee for this, and a majority of personal policies do not cover it.
Being aware of these three types of charges in advance helps you decide if purchasing extra coverage is a wise move for your trip, especially since they alone can cost an additional few hundred dollars.
Complement Your Insurance with Your Credit Card
This is the part where most people miss out, and it can turn out to be a costly mistake. A number of widely used credit cards include rental car insurance as an automatic perk when you use that card for your rental payment.
There are two types of credit card rental coverage that you need to know about:
Secondary coverage will only start to pay after your personal auto insurance has covered the damages. It can cover your deductible and also some of the gaps that your policy leaves out.
Primary coverage is more advantageous. This implies that the claim is made through the credit card company, and you never involve your own personal insurance company. This safeguards your premium from a hike after the claim.
Visa Signature, Mastercard World Elite, and some American Express credit cards often come with the most generous rental benefits. Before your trip, check the benefits guide that came with your card or call the customer service number on the back of the card. The terms differ by card, and some luxury, truck, and SUV type vehicles are excluded by some cards.
Understanding the Rental Company’s Insurance Options
At the rental counter, you’ll be offered several protection products. The agent will make them sound essential. Here’s what each one actually does and what it costs.
| Coverage Type | What It Does | Typical Daily Cost |
| Collision Damage Waiver (CDW) | Removes your financial liability for vehicle damage or theft | $15 to $30 |
| Supplemental Liability Protection (SLP) | Adds liability coverage above your personal policy limits | $10 to $15 |
| Personal Accident Insurance (PAI) | Covers medical costs for you and your passengers | $4 to $8 |
| Personal Effects Coverage (PEC) | Protects personal belongings stolen from the rental car | $2 to $5 |
The CDW is the product the rental company pushes hardest. If you already carry collision and comprehensive on your personal vehicle, you likely don’t need it. If you only carry liability insurance, the CDW fills a real gap and may be worth the price.
When Buying the Rental Company’s Coverage Actually Makes Sense
Renting car coverage add-ons can be tempting, but are rarely worth the money. However, there are a few situations in which deciding to pay a rental company’s coverage is simply the right decision.
- Your auto insurance is limited to liability coverage only, and you do not have collision or comprehensive coverage on your vehicle policy.
- Your auto insurance policy has a high deductible (around $1,000 or more), and you want to minimize your liability exposure.
- You’re using a car rental for work purposes, and your personal auto insurance policy does not cover the commercial use.
- You’re going overseas, and your US car insurance will not cover you.
- You do not have a credit card that provides rental insurance, and you want to make sure you have maximum protection.
Does Car Insurance Cover Rentals in Other States?
Of course. Your US car insurance policy is active across all 50 states as well as Washington D.C. Therefore, you don’t have to adjust your policy or inform your insurer just because you happen to rent a car in a different state. Your coverage limits and deductibles will be the same across the entire country.
Does Car Insurance Cover International Rentals?
This is where your US automobile policy fails to offer protection. The majority of US car insurance policies do not provide coverage for foreign countries. Canada is usually a welcome exception, although it may come with limited coverage, while Mexico is generally entirely excluded by most US car insurance companies.
When you’re renting a car abroad, get in touch with your car insurance company before you leave. Normally, you will have to buy insurance from the rental car company or get an add-on to your travel insurance that includes rental car protection.
5 Things To Do Before You Rent a Car
Just a bit of prep work before your trip can make sure you’re in full control at the rental counter.
- Contact your insurance company and inquire if your car insurance policy includes rental cars and, if it does, under what conditions.
- Verify the amount of your deductible so you know your exact financial risk if something goes wrong.
- Look through your credit card perks to discover whether you have primary or secondary insurance for rentals and what vehicle models are covered.
- Make sure to know why you are renting a car, because if you are renting for business, it may not be included in your personal auto insurance coverage.
- Keep handy important contact numbers, including your insurance carrier’s claims phone number and the phone number for your credit card benefits, so you are ready in case anything goes wrong.
What To Do If You Have an Accident in a Rental Car
It’s important that you stay calm. Then take these steps one at a time. Take photographs of the accident scene before moving anything around. Share information with the other party. Call the police if there are any injuries or if there’s been serious damage to the vehicles.
Call the rental car company right away and ask them to provide a written copy of the document that records the damages. Next, get in touch with your own car insurance carrier to file your claim. Additionally, should your credit card have rental car insurance, get in touch with that card’s benefits section too.
It’s very important to move without delay. Delaying the reporting of your accident may cause complications with your claim and might even lead to lower coverage.
You may also read: Does Renters Insurance Cover Wildfires?
The Bottom Line
Chances are, you already have coverage in place. The vast majority of drivers who have comprehensive car insurance and a leading credit card are well-protected for rental cars without having to pay extra at the rental counter. Knowing your coverage is the key.
Review your current policy and credit card benefits and face that rental counter with assurance.
If you want to be certain that your car insurance policy is fully equipped to cover you in any situation, go to insurancheck.com and discover policies that genuinely work for you.
