• Oct 12, 2023
• / by admin

How Does Insurance Rental Car Work? Find Out The Answer

When standing at the counter desk of the rental car company, you might find a long queue behind you. You get your favorite car under budget for a week and are excited for a family vacation or group outing. Suddenly, the company gives you an intimidating rental contract with various insurance options. And now all you can think about is whether or not to take rental car insurance, and all the excitement takes a backseat.

We all know car insurance is not something that we deal with in our day-to-day lives. Anyone can get confused or overwhelmed when they see various types of rental car coverage they are unaware of. Do not worry! This blog will guide you on some basic facts about car insurance, how insurance rental cars work, and more. Continue reading!

What Is Car Rental Insurance?

Car rental insurance is a protection plan that protects you and the car in case of theft, collision, and more. There are different ways to get rental car insurance. For instance, with your credit card benefits, personal insurance policy, or insurance from a rental car company. Rental insurance may offer coverage for damage, injury, or vehicle damage. It may also cover theft, injuries, and more. But, all this depends on the policy.

Do You Need A Rental Car Insurance?

Buying rental car insurance protects you from unforeseen accidents that might happen on the way. However, finding out whether you need car rental insurance isn't all about one factor. There are a few things you need to check before making a decision. 

Firstly, you need to check your current auto insurance coverage. While most of us don't know it, many times, our auto insurance plan already covers the rental car insurance as well. Thus, by buying car rental insurance, we are just losing more of our cash for no extra benefits. If you are not sure about whether your auto insurance policy covers rental cars as well, asking your insurance provider can help.

Things You Should Know Before Taking A Rental Insurance

Buying rental car insurance for the first time can be an overwhelming experience. There is a lot of information to grasp and plans to choose from, and you end up feeling more confused than ready. Thus, here are a few things to know before buying a rental car insurance to simplify the buying process.

• One should be aware of the types of rental car insurance, such as collision damage, personal accident, waiver, and more!
• On average, the rental car insurance cost per day is $61. But, the insurance cost may depend on where you rent the car and purchase coverage.
• Usually, when you rent a car, health insurance, car insurance, and all the credit card benefits typically provide you coverage.
• You should know other rental car insurance options like temporary, travel, and non-owner car insurance.

How Does Car Rental Insurance Work?

The rental car insurance sold by rental car companies always covers liability insurance in almost every state. It means that if an accident occurs and you need to pay for the damages caused to the other party, the rental car insurance policy will cover that as well.

If you already have auto insurance coverage, the rental car insurance policy can supplement it. It means that if your rental car insurance policy has some benefits that your auto insurance policy doesn't provide, these benefits will be provided to you. Also, the coverage provided by the rental car insurance policy is added to the auto insurance coverage, meaning you will be getting a better collision damage waiver.

How Does Insurance Rental Car Work After An Accident?

The biggest question in our mind while buying rental car insurance is how it will work if you find yourself in an accident. Let's find out the answer.

• In this situation, assume that you caused the accident (even partially). In that case, your liability insurance will cover medical and vehicle damage expenses for other drivers involved. But it depends on your predetermined policy limits.
• If the rental car is damaged or you and your passengers get injured. In that case, you will have to complete a report on the vehicle incident or accident to the rental car company.
• If the car is damaged at the time of the rental period, but you have a CDW or LDW, it is not your responsibility to pay for the damage to your rental company. Remember, part of the damage is included in CDW or LDW. You are non-payable for that only.
• A CDW or LDW is insufficient to cover all the accident expenses you may be responsible for. You will have to pay depending on your rental car company. You can use your comprehensive insurance or personal collision to cover the remaining damage. If you don't have this coverage, a rental company can add an extra amount to your total cost.
• Let's say you've been in an accident and have rental insurance through your credit card provider. First, you need to report the accident to the credit card company and issue a claim. They will ask you to provide certain documents, such as the rental car agreement, a copy of the accident report, and a repair estimate.

Note: Always remember that with most rental car companies, your car insurance will not be approved if the driver causes an accident. It could be due to drugs, alcohol, or driving an unauthorized vehicle. The coverage will also not be valid if you provide incorrect information when booking a rental car.

Types Of Car Rental Insurance

Below, we have provided the most common types of insurance the car rental company offers. These are:

Collision Damage Waiver

A collision damage waiver or loss damage waiver helps cover repairs if you cause any damage to the rental car. Coverage may not include certain car parts, like windshields or tires. It also may not cover damage caused by weather or damage to personal property.

Rental Car Liability Insurance

Liability insurance includes damage caused to other property, vehicles, and people in an accident. These only include if you're driving a rental car.

Note: Liability coverage does not include you, others with you, or the rental car. In this situation, purchasing additional insurance will be better for higher coverage.

Personal Accident Insurance

Personal accident insurance includes the medical costs for injuries to you and your passengers during the accident. 

Personal Effects Coverage

There can be situations when personal items like luggage or clothing get stolen from the car you rented. Also, they might gone with the rental car that has been stolen. Both situations can be frustrating, but you don't have to worry about anything because it's all covered under personal effects coverage.

How To Get Coverage For Rental Car?

Below are some ways to get coverage for a rental car. According to your requirements, you can choose: 

Directly Purchase The Rental Insurance From The Company

Generally, this is one of the most convenient and easiest options. Still, it is expensive compared to insurance provided by a third-party company, your credit card company, or your personal auto policy.

You Can Purchase The Personal Coverage Policy

Personal coverage policy includes comprehensive and collision coverage. Typically, this covers damages to a rental vehicle. But, there can be some exceptional situations. For example, if you are renting a car for business purposes or traveling out of the country.

Also Read: What Happens If I Crash A Rental Car?

You Can Purchase Rental Insurance From A Third-Party Provider

If your personal coverage does not extend to a rental car, you can purchase it from a third-party provider. Several third-party insurance companies are available to provide insurance for your rental car. So, by this, you can compare different insurance options to choose the best one per your needs.

You Can Use A Credit Card For Rental Car Insurance

Some credit cards provide rental car insurance. You can take advantage of this by booking a reservation with your credit card. Before you book, see if you can get rental car insurance with your existing credit card.

Know About Your Existing Insurance Plans

Before opting for additional insurance, check that you might have paid for the same coverage.

Personal Auto Insurance

Many personal auto insurance offer coverage in the case of rental cars. But, if you are uncertain about what will be included in your insurance plan, you can contact your agent or insurer.

Remember that having the same insurance does not mean that you will get additional coverage when driving the vehicle.

Personal Health Insurance

Be sure of your decisions at the counter desk, and do not ignore a health insurance policy if you already have one. Health care plans in the U.S. often cover health care needs when traveling in the U.S., sometimes even to other countries. Be certain about your policy terms, particularly when traveling outside the U.S. 

Benefits Of Credit Cards

When you reserve a car and pay for your rental with your credit card, generally, you will get insurance for damage or theft to the rental car, with other benefits.

Travel Insurance

You may get sufficient coverage for personal and medical effects if you already have travel insurance. Ensure that you do not purchase any duplicate insurance. 

Non- Owner Car Insurance

People who don't own a car can still buy car coverage. You can purchase a non-owner policy. This insurance is best for people who very often rent cars. Moreover, this option is more cost-effective than purchasing a policy from the rental company every time.

When Should You Purchase The Additional Car Coverage?

With all the other options, is there still a need to purchase coverage from a rental company? Some things to consider are:

You Do Not Have Your Car Insurance

Purchasing it from a rental car company is easier and more convenient for people without car insurance. 

Making Payment Through A Debit Card Or By Cash

Usually, the debit card does not include the collision damage waiver, but the credit card does.

Looking To Avoid Deductible

The health and coverage policies may charge you high deductibles at the time of an accident that nobody wants to pay from his/her pocket. 

Alternatives Do Not Cover Certain Expenses

There might not be any form of coverage available for expenses, such as towing and administrative fees. 

Travel International

You may not get the same insurance and credit card benefits abroad as you used to have in your home country. 

Frequently Asked Questions

How Much Is A Rental Car Insurance Cost?

If you purchase all the insurance offered by the rental car company, you will likely have to pay an extra $30 to $60 or more per day. It will include liability coverage, collision damage waiver, and more!

Does A Visa Card Offers Coverage For Rental Car?

A Visa card car rental insurance provides up to the full cost of repair or replacement of a rental car if damage happens because of theft or collision of the car.