What Car Insurance Coverage Do I Need?

Decide how much liability coverage is enough for similar type of drivers.

Can I rent a car without insurance?

We’ve all been there, standing at the rental car counter filling out the forms so you can take your new rental car out on the road for the rest of your vacation. Then the clerk asks, do you want to pay an extra fee to purchase insurance coverage from the rental car company?

If you aren’t sure if you need it, you aren’t alone. For starters, it is always advisable to call your auto insurance company before you go away on vacation to find out what kind of coverage your policy affords you while driving a rental car. Some policies cover you much more than others, and the best way to be sure is to ask ahead of time.

How Does Insurance Work On A Rental Car?

There are generally three kinds of auto insurance that are relevant to rental cars. The first, and simplest is the insurance coverage provided by your own car insurance policy. Some policies do not offer any coverage at all when you rent a vehicle; other comprehensive policies cover you completely against accidents, damage, or theft. Having your own auto policy cover the rental car is the best coverage you can get, if the language of your policy includes it, so always check your own auto insurance policy first.

The second kind of coverage is offered by the car rental company to insure the vehicle while you are in possession of it. These policies can be a bit more expensive if you get them at the time when you pick up your vehicle rather than arranging them in advance, but they usually do act as personal liability insurance, which covers the car itself as well as any damage to other property, cars, or injuries caused to others as well.

The third and final kind of insurance is sometimes offered by credit card companies to provide some coverage for you if you choose to use their card when paying your car rental agreement fee. Insurance of this type varies quite a bit from one card to another, with primary insurance coverage provided by cards like Chase Sapphire Preferred giving the best value in most cases. Primary insurance covers damage to the rental car, but it doesn’t cover any injuries to others or their property.

Do You Need Insurance To Rent A Car?

Every state in the United States has a law on the books requiring some kind of coverage for any vehicle driven on public roads. However, the requirements vary quite a bit on a state-to-state basis. Some states require much more in-depth coverage with higher limits than others.

The car rental company, or your credit card company will be able to provide the minimum amount of coverage you need to rent a car even if you have no car or car insurance policy of your own, but that coverage may be far too little to protect you in the case of a serious accident where personal injury and damage to property are involved. Usually, those basic kinds of coverage are heavily focused on protecting the rental car itself, and not much else.

Do You Need To Buy Extra Insurance?

Always start by examining your own auto insurance policy to see if your car insurance extends to cover rental vehicles as well, and to what extent you would be covered if a rental car accident occurs. Specifically ask if property other than the car itself, and if injuries to anyone are covered by your policy. If your insurance is sufficient, then you are all set. If your insurance does not cover these eventualities, you have a few options.

You can contact your car insurance company and ask for a temporary rider that expands your coverage while renting a vehicle during the rental period. This can often be purchased for just a few days or a single month, so the expense is usually very low.

Alternatively, you can choose to purchase rental car insurance as a supplemental policy from the car rental company, or your credit card may provide some additional coverage. However, these coverages are almost always limited to the rental car itself and not to damage extending beyond those two bumpers. The best advice is to check ahead of time and know exactly what kind of coverage you have before deciding if you want to purchase more.

Why Renters Are Not Required to Buy Insurance

Your car rental company will always include a minimal amount of coverage sufficient for you to drive the car on the road (and the cost of that insurance is included in the rental car price per day) however that is far from what you should have to guarantee your peace of mind when you are driving your rental vehicle. Always ask the car rental company about acquiring additional coverage, unless your own auto insurance policy is already providing quality coverage that extends to a rental car.

Basic Liability: This kind of coverage enhances the minimal coverage provided by the rental car company.

Collision Damage Waiver: Sometimes it will also be known as a Loss Damage Waiver. This coverage protects you in case the car is stolen or damaged.

Personal Effects Coverage: A policy that comes into effect if there is a theft of items in the vehicle. The coverage is relatively inexpensive and may be a huge help if someone steals your laptop out of the back of your rental car.

Personal Accident Insurance: Medical coverage for treatment, hospital stays, or ambulances. Keep in mind this kind of coverage overlaps with your health insurance so you should see if it is needed, depending on how comprehensive your health insurance policy might be.

The simple answer is, renters are not required to buy insurance for a rental vehicle because the basic coverage is already included in the rental car price… but if you ever do have an accident, you’ll be very glad you also acquired supplemental insurance to make sure any expenses are handled for you.

How Your Personal Coverage Transfers to Rentals

Keep in mind that any personal insurance coverage is based on the policy agreement between you and your insurance company. That document is a binding contract, so the specific wording is important, and it will dictate exactly to what extent your policy transfers to rentals. Some insurance companies and policies offer complete coverage on rental vehicles, and others do not extend coverage to rentals at all. If you plan to rent vehicles often, it’s a topic you should ask about extensively before choosing the right insurance company for your needs. Thankfully free quote services like this one make finding the right coverage easier and more affordable than ever.

How Your Credit Card Could Protect You

Many credit cards now offer ancillary insurance coverage at a minimal level when you choose to use their specific card at the time you make your payment to the rental car company. Keep in mind; your credit card won’t provide any coverage at all unless you use that specific card to pay for the rental vehicle term. The insurance offered is almost always focused specifically on the value of the rental vehicle itself, and usually provides zero coverage for damage to other property or personal injury. A simple call to your credit card company using the phone number on the back of your card will get you in contact with support staff who can give you all the details about any insurance coverage they provide for your rental vehicles.

How the Rental Agency Could Provide Coverage

Rental car companies are required by law to provide car insurance coverage options for their customers. However, their rates are rarely competitive when compared to purchasing a temporary insurance coverage rider from your primary insurance providers. Companies like State Farm, and others specialize in auto insurance while rental car companies like Avis and Budget often use minimal insurance policy options as a quick way to enhance the profit of your rental car agreement for their own bottom line.

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