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- Why Renters Are Not Required to Buy Insurance
- How Your Personal Coverage Transfers to Rentals
- How Your Credit Card Could Protect You
- How the Rental Agency Could Provide Coverage
Rental cars automatically are insured by the company for the minimum liability requirements of the state. So, when you rent a car, it is insured and you won’t get into legal trouble if you don’t have your own insurance.
Supplemental insurance rates are negotiable and something that should be considered because the state minimum requirements don’t provide adequate protection should you cause a major accident.
If you do not own your own vehicle, and you are tempted not to take on the costs of buying specialized insurance, read this guide to insuring rental cars for all of the pertinent information that you need to know.
Why Renters Are Not Legally Bound to Buying Insurance
You are required by law in most states to insure all vehicles that you own so the rental company has to carry the minimum required coverage.
Since the rental company will have the vehicle insured, you won’t get a ticket for driving without insurance.
While you cannot be cited, you can still face a civil lawsuit for causing third-party damages or injuries when you do not have enough liability insurance to pay for property damage or bodily injury expenses.
Almost every state requires liability insurance, but typically, the required amount is not enough to pay for damages you inflict on others in a major crash. You will be responsible for the balance of what insurance pays and the cost of the damage.
Also, keep in mind, liability coverage (the kind of protection that is automatically on the rental vehicle) does not cover damage to the rental vehicle itself. If you total the car, you will be liable for the replacement cost out of pocket.
If you are negligent for the injuries, third-party damages or the damage to the rental, you may be ordered to pay by liquidating your assets or by having your wages garnished.
To truly protect yourself financially, consider the following three ways in which you can be sure you have adequate coverage when renting a car.
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#1 – Your Own Coverage Will Transfer to the Rental
Some might not even be aware that their private passenger auto insurance will extend to cover them while they are driving a rental in the United States.
You need to be sure to check with your carrier to learn exactly how your coverage extends, but it’s nice to know that your liability insurance will follow you as the driver.
Here is a brief explanation of how your personal coverage can protect you:
— Liability Insurance
When you own a car and live in a state where car insurance is a requirement, you will have at least a minimum amount of liability coverage.
Liability coverage will pay third-party expenses for:
- Medical treatments
- Emergency transport
- Loss of wages
- Repairs or replacements when you are negligent for a collision
When you review your insurance policy, you will see that the liability coverage will follow you to provide protection if you are borrowing a car or renting a replacement.
You should always check with your agent to see if you need to notify the insurer before you rent.
There are also other considerations to make. Be sure to check your limits and consider raising them.
When you are driving on unfamiliar terrain, the risk of having a loss is higher.
On many occasions, however, insurers will raise your limits automatically to match state requirements if yours are too low.
— Physical Damage
Physical damage coverage will help to pay for repairs and car replacement of the covered vehicle when you experience a covered loss. It is made up of comprehensive and collision coverage.
Collision losses involve crashing into an object. Comprehensive coverage will pay for losses that do not involve a collision.
Some examples include:
- Glass breakage
Not all auto insurance policies have physical damage coverage.
You should review your policy closely to see if you have both comprehensive and collision coverage.
If you do, you will be happy to hear that your coverage for physical damage will transfer to the rental car. It is defined under the policy as a replacement vehicle.
Whatever deductible that you carry on your policy will apply when filing a claim for your rental.
#2 – Your Credit Card Will Likely Offer Protection
Many credit cards include insurance coverage for rental vehicles. The level and type of insurance will vary, but it’s worth looking into. Once you figure out which of your cards will provide the best complimentary coverage, you must make sure you do the following:
- purchase the rental with that card
- refuse supplemental insurance from the rental company
#3 – The Rental Agency Will Offer Supplemental Coverage Options
All consumers who have rented a car know that rental agents are going to push car insurance.
Now that you know how your insurance works, you can decide if you need to purchase their coverage.
There are several types of insurance peddled at the counter. Knowing how one differs from the other is crucial to cross the duplicates off the list and select the ones that will give you peace of mind.
Here is a breakdown of each:
|Insurance Coverage||Protection Provided|
|Collision Damage Waiver (CDW) or Loss Damage Waiver (LDW)||The CDW is a damage waiver that will pay for all of the repairs to a rental car when it is damaged or stolen. The loss must happen when an authorized driver is operating the car and during the period when the waiver is valid.|
|Personal Accident Insurance||This coverage pays for emergency medical transport and medical benefits if the renter or their passengers are injured in an accident.|
|Supplemental Liability Protection||Car insurers are required to provide a limited amount of liability cover, but you can buy a supplemental amount of liability protection that covers you if you are sued. Anything that is carried by the rental agency is there to protect them and not necessarily you.|
|Personal Effects Coverage||You most likely will travel with valuable items. If you lose something of value, Personal Effects Coverage will pay to replace up to $500 of your valuables per person. Make sure you know how your property insurance works first.|
You can rent a car without insurance, but buying supplemental insurance is best. If you have car insurance for your own vehicle, just keep in mind your level of coverage will transfer to the rental vehicle.
If you currently want to price the cost of personal insurance, use an online rate comparison tool and see how much cover will cost for your cars.