Rental Car Insurance: Do I need to buy it?

3.11.2021
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If you want to hire a car, the first thing you need to do is read the car-sharing agreement. You must first see your insurance agent before engaging in a rental automobile arrangement with an insurance provider. If you have your own vehicle insurance, inquire as to whether or not the rental car can be covered under your policy. Based on your homeowner or auto insurance coverage, your insurance agent will recommend the right plans for your rented car. Car insurance plans and coverage varies from state to state. Traditional insurance companies provide the following coverage, which customers may seek:

  • Collision/Loss Damage Waiver (CDW): If your rental car is damaged in an accident, CDW or LDW covers the repairs; however, it does not cover speeding or driving on dirt roads. Additionally, while the automobile is being repaired, a rental firm may charge you for “loss of use” of the car (missed rental income).
  • Liability coverage: Liability coverage covers you if you injure someone or damage some property. It depends upon the liability limit you have taken. If you have sufficient liability coverage, you don’t need to have a rental car insurance policy.
    Personal accidental insurance: It covers you and your passengers and helps you to pay your medical bill. If you have personal medical insurance or personal injury protection on your own car insurance policy, you don’t need to buy rental car insurance but keep in mind that it will not cover the third party.
  • Personal effects coverage: It will cover your belongings if you get lost from within the car. So consult your personal insurance coverage agent to check how much it covers in your personal effects insurance policy. If it is sufficient to cover your belongings, then no need to buy these kinds of coverages in your rental car insurance.

The first question before taking rental insurance is: Do I need to buy insurance for a rental car or does my personal insurance cover me?

  1. Rental insurance can be covered under personal insurance or comprehensive insurance.
    • Generally, in most insurance policies, the coverage you have on your personal auto policy does not transfer over to the rental car, but in rare cases, liabilities such as third-party damage and medical injuries may be covered under your personal auto policy.
    • Comprehensive coverage (The insurance that completely covers both the parties involved in an accident) also covers if the rental car gets damaged or you are injured during the accident.
  2. Commercial vehicles are not covered under the personal auto policy. For example, if you are driving a commercial vehicle and it stacks with an accident then your personal car policy does not cover you.
  3. Some coverages cannot get transferred from personal car insurance to rental car insurance. Like, “Loss of use” If you rammed a hired car and can get damaged. The car needs to be repaired in a workshop and that may take 10-15 days. Now for that time period, the rental company will charge you the rent which is not covered under your personal car insurance policy.
  4. If you buy insurance for a rental car, in case of an accident don’t need to worry. You can walk away if all the losses will be paid by the insurance company. This accidental information will not be shown in your insurance record and the amount offered to you by the insurance company does not get raised because of your poor driving record.

Second, does my credit card provide rental car insurance?

According to Insurance Information Institute (III) if your credit card covers your personal auto insurance it may provide you some extra benefits on your hired car insurance. You can get the information by calling the credit card company’s toll-free number. If your credit card includes collision coverage for rental automobiles, for example, you may choose not to purchase collision coverage from the car rental company. According to Forbes, some credit card insurance companies does not provide coverage for certain types of rental vehicles like:

  • Luxury vehicles
  • Trucks
  • Motorcycles
  • Motorhomes

In the end, the final conclusion is that it is good to buy insurance for a rental car. It is not that expensive. Moreover, it will give you extra peace of mind.

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