Rental Car Insurance

Do you need to purchase the insurance when you rent a car?

Possibly. Car rental companies are required by law in many states to provide minimum amounts of liability protection for renters of their vehicles, but this is usually not enough to protect you in an injury accident.

When you go to a rental company, the agent will ask you if you want to purchase coverage for the rental aka damage waiver protection. If you decline, they will ask you to initial the paperwork. This is an important financial choice. Figure out if you need to purchase the damage waiver from the Rental Car Company to avoid financial losses or spend money on protection that you already have or don't need.

When you rent a car you can get covered several ways without buying the damage waiver protection:

Use your current auto insurance policy

Take your insurance I.D. card with you to rent the car. The car rental company may require it and it will save time if you are pulled over by the police in the rental. The coverage and deductibles on your own auto insurance policy will automatically transfer to cars that you rent as long as you are not using the rental car for business purposes leave the US. Check the declarations page of your policy to make sure you carry Property Damage Liability and Comprehensive and Collision coverage. Notice the limits on Property Damage Liability, Comprehensive and Collision, and your deductibles. If you are renting a car outside the US, really consider purchasing the damage waiver coverage since most auto insurance policies only cover drivers in the US.

Damages to the rental car will be covered by the Property Damage Liability part of your car insurance policy if you are renting the car for pleasure. But if the rental car was a loaner while your car was being repaired, damages will be covered by the Comprehensive and Collision coverage portion of your policy. You would still have to pay the deductible for these for damage to the rental.

Use coverage provided by your credit card.

Credit card companies pedal rental car insurance as one of the benefits of using their card. But the coverage usually only pays after your auto insurance policy limits have been exhausted and only if you used their card to pay for the entire price of the rental car. Levels of protection from credit cards can change often, so call the credit card company to find out the latest level of protection for rentals. Ask about Liability, Comprehensive and Collision coverage for rentals and get it in writing if possible. Find out about exclusions. The credit card company may exclude coverage for luxury or exotic rental cars.

Buy non-owner car insurance.

If you rent cars often and don't have your own auto insurance, save money by buying a "Non-Owned Auto" Liability policy which gives similar protection to Excess Liability coverage offered from the rental car company. They usually cost around $300-$400 each year and cover you for any non business automobile claim. It only covers bodily injury and property damage liability. It doesn't pay for damages to the rental so you will still need to purchase the Collision Damage Waiver.

If your credit card does not offer sufficient coverage and you do not want to use your current auto insurance policy, buy the damage waiver protection offered by the rental company. Remember the rental car agent makes a commission, when asking their advice.

Collision Damage Waiver

Collision Damage Waiver (CDW) or loss damage waiver (LDW) is often referred to as insurance but is actually a waiver of responsibility. It costs $15 to $30 per day. When you buy Damage Waiver, this protection waives your financial responsibility for damage or theft of the rental. If something happens to the car, you file short claim form and the rental car company would pay to repair or replace it.

Damage Waiver coverage may become void if you cause an accident while violating the law. Offenses could include speeding, driving off road or DUI, be responsible when you are driving the rental.

If you only your state minimum limits such as $5,000 for Property Damage Liability in California, you may still want to buy the Damage Waiver because it may not be enough to pay for repairing the rental. You would owe the difference. If you are responsible for damages to others car's or property for an at fault accident, the Rental car companies will also try and recover the loss of rental income for the car that's damaged.

Damage Waiver coverage usually has no deductible, unlike using your private car insurance and being covered by your Comprehensive or Collision coverage.

Excess liability coverage

Excess liability coverage is often offered by car rental companies. They will only pay after your personal auto insurance policy limits are exhausted. This price for this protection is around $10 to $13 dollars per day for 1 million dollars worth of excess protection. The liability portion of your car insurance policy also covers your non business rental, so make sure you have high enough limits of bodily injury and property damage liability on your car insurance.

Personal Accident Insurance

Personal Accident Insurance pays your medical expenses and ambulance fees if you or your passengers are injured in an accident or as a pedestrian. If you live in a "no fault" state, have health insurance or carry medical expenses coverage you probably already have this protection and do not need to buy it again. Check your car and health insurance policies to make sure. A claim for medical expenses and ambulance fees against your own car insurance should not cause a raise in premiums, so there is no advantage to duplicate coverage. The price of this protection usually runs from $3 to $8 per day.

Personal Effects Coverage

Personal Effects Coverage is for theft of you or your passenger's personal items such as cameras, camcorders or Laptop computers. There is usually do not have to pay a deductible. If you already have this protection included on your home or renters insurance, don't buy it from the rental company. But most homeowners or renters deductibles are $500 or higher and most of your personal property may not be covered. Look up the exclusions and declarations page of your policy for your deductible to find out if the items you are taking are covered.

If your items are stolen from the rental, file a claim form when you return the car you should be reimbursed. You will need to prove you owned the stolen items via receipts. Just ask the rental agent about exclusions before you buy Personal Effects Coverage for $3 to $10 per day.

Auto Insurance Tip

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