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Why Do You Need Insurance for a Rental Car?

Millions of rental cars are used each year. Like nearly every other vehicle on the road, they have to be covered by an insurance policy. A thorough understanding of what rental car insurance is, why it's essential, and where you can get it is crucial before renting a vehicle.
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Why Do You Need Insurance for a Rental Car?

Written by Brian Greenberg

Last updated: July 6th, 2022

Reviewed by Grant Desselle

What is Rental Car Insurance?

Rental car insurance provides coverage when you drive a rental vehicle. It serves the same purpose as a personal auto insurance policy, with many of the same benefits. For example, if you’re involved in an accident while driving a rented car, the insurance policy can be used to cover damages to either vehicle or pay for medical bills.

Do You Need Auto Insurance to Rent a Car?

Most major car rental companies don’t require you to show proof of personal auto insurance before renting. However, some companies let you use your coverage instead of the one they offer. If you plan to take advantage of this (because it’s sometimes more cost-efficient), you may have to show proof of insurance. Additionally, some rental car providers may only allow you to use personal policies if it’s full coverage versus minimum coverage.

You can still rent a vehicle if you don’t have personal car insurance coverage. But you’ll likely need to pay a small additional fee for your rental to cover insurance costs. Options and rates for rental car insurance vary by provider, so ask a customer representative to explain the different options to you before making any decisions.

How is Rental Car Insurance Different From a Personal Auto Insurance Policy?

Most rental car insurance policies provide liability coverage that only covers the other party’s vehicle damage and medical bills if you’re found at fault for the accident. However, at major rental car providers, you can sometimes add personal accident coverage as well as loss and collision damage waivers for additional fees. These fees are generally charged on top of the basic coverage provided.

On the other hand, a personal auto insurance policy generally caters to both you and the rental car. This means your medical bills and the rental car’s damage should be covered. However, you’ll want to read your personal policy in detail because minimum coverage options don’t always cover rental vehicles. If you’re not sure about your coverage, you can call your provider and speak with a customer service representative about any questions or concerns you have.

What Does Rental Car Insurance Typically Cover?

Rental car insurance typically only covers property damage or injuries you cause while driving the rental. Sometimes, you’ll have the option to add additional protection that covers yourself, but this varies from one rental car company to another.

However, without adding that optional coverage, there’s a lot that basic rental car insurance policies typically don’t cover, like:

  • Your injuries when involved in an accident
  • Damages to the rental car (which you’ll be responsible for)
  • Theft of the vehicle
  • Loss of personal belongings

Is it Cheaper to Have Your Own Auto Insurance Policy?

Generally, using your auto insurance policy is cheaper and might even provide more coverage. But most minimum state coverage policies won’t cover damages to rental cars. Instead, you’ll need full coverage, or you’ll need to add rental car coverage. The latter option is available from several prominent insurance companies, but you should call your provider and check ahead of time to be sure.

Can I Get Rental Car Insurance Through My Credit Card?

Certain credit card companies provide complimentary rental car insurance to their cardholders or offer an affordable option you can purchase through them. However, rental car insurance through credit card companies generally only applies to traditional rental options, not ride-sharing.

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