Some drivers find that having rental car insurance is essential. Others consider it to be a wasteful expense. But how do you figure out which group you belong to?

Review your personal auto insurance policy’s coverage before renting a vehicle. A rented car may occasionally be covered by the insurance you carry for your own vehicle. In other words, purchasing rental car insurance may be redundant with other coverage you currently have.

But in some circumstances, the additional expense of the rental company’s insurance might make sense. Because of this, it’s critical to comprehend what the rental company provides and what your auto insurance covers.

Law and Rental Car Insurance

Although renters insurance is not required by law, you can rent a car without having your own auto insurance policy. However, rental companies often have the bare minimum insurance on their cars. If you get into an accident with the rental and don’t have your own auto insurance, you can be forced to pay a lot of money.

Should you purchase renters insurance if it’s not required?

In many circumstances, increasing your personal insurance coverage limits for a year would be less expensive than purchasing rental car insurance for a two-week trip.

Related: Weekend Car Insurance | Does It Exist & How To Get It?

The cost of rental car insurance might potentially quadruple your monthly payments if you choose a complete coverage plan. Additionally, you technically don’t need insurance as rental automobiles have coverage that meets the state minimums. However, in some circumstances, it might still be worthwhile.

No state mandates any level of collision insurance or comprehensive insurance, which covers the costs of maintaining your car. If you only have the bare minimum of coverage required by your state, purchasing rental car insurance may be a good idea. This is particularly true given that you’ll presumably be operating a strange vehicle in a strange place.

Based on 2019 NAIC data, a Triple-I study found that 79 percent of insured drivers buy both liability and comprehensive coverage, and 75 percent buy collision coverage.

Does personal car insurance cover rental cars?

As long as you utilize the rental automobile for personal travel, your auto insurance policy will often offer a comparable level of protection. If you have comprehensive collision insurance, for instance, your rental car will probably be covered if it is broken into, stolen from, or totaled, provided it is of comparable worth to your car. If you submit a claim to your insurer, your deductible, a fixed sum reduced from the claim settlement, will still be in effect.

Up to your policy limitations, liability insurance covers any injuries or property damage you cause to third parties during a collision. Your personal injuries, as well as any harm done to your rented car, are not covered.

You can buy a loss-damage waiver, or LDW, from the rental company if you don’t have comprehensive or collision coverage or you’re renting a premium vehicle that your insurance won’t cover. As long as you follow the terms of your rental agreement, an LDW waives your financial liability for the rental automobile if it is lost or destroyed.

When is Renters Insurance Required?

If you have liability and full coverage insurance on your own car, it may cover you when you rent a car in the United States. Because of this, your auto insurance may be enough to cover cars you rent within the country.

Still, there are other kinds of rental car insurance for people who need them, which we’ll discuss in more detail below.

Types Of Rental Insurance

Your rental car company could offer you four main types of insurance: a loss damage waiver (LDW), liability coverage, personal accident insurance, and coverage for your personal belongings.

Liability insurance

Car rental companies also sell liability car insurance. This pays for damage to other drivers’ cars and medical bills if you cause an accident. If you have personal liability insurance, this will be covered by your own policy (as long as the trip isn’t for work). But if you know you’ll be driving around Miami with Lamborghinis and Ferraris, $10,000 in liability coverage might not be enough. You might want to raise your insurance limits.

You can also get non-owners car insurance if you move a lot but don’t own a car. This will cover you in all driving situations.

Loss-damage Waiver Insurance

With this choice, you don’t have to pay for a total loss-damage from an accident, damage to the environment, theft, or abuse. The same thing happens with a collision damage waiver (CDW), but it doesn’t protect against theft. These waivers are similar to full coverage and accident insurance for the rental car.

You probably don’t need this if you already have full coverage and accident insurance. But if you get a loss-damage waiver, you won’t have to pay a fee, which is something else to consider.

If you damage the car and it has to go to the shop for repairs, the rental car company can charge you for every day the car is out of service. The loss-damage waiver and most full-coverage insurance plans will protect you from these fees. Some won’t, though, so you should check your own policy before you rent a car.

Personal Accident Insurance

This kind of insurance pays for your and your passenger’s medical bills, no matter who was to blame in an accident. It’s the same as getting medical payments (MedPay) and personal injury protection (PIP) on a regular car.

You don’t need personal accident insurance if you have either of these other types of insurance. Also, if your private car insurance doesn’t cover your hospital costs, your health insurance might after you pay your health deductible. Personal accident insurance doesn’t require a fee.

Coverage for Personal Items

This extra coverage protects things like electronics, luggage, and your own clothes. If you have renters or homeowners insurance, it will also cover personal items that are stolen from a rental car.

Other Kinds of Insurance

Your credit card company might also cover you or a trip insurance plan in addition to what the rental car company can offer.

Insurance on a Premium Credit Card 

Many premium credit cards come with main coverage for rental cars. Primary coverage has high amounts and can handle the whole claim, so your own insurance company won’t find out about it (and won’t raise your rates).

On the other hand, secondary security is often part of standard cards. This has smaller limits, and you have to go through your own insurance company first if you want to make a claim. In either case, you must use a credit card to book the hire to be covered.

Car Rental Travel Insurance

Most travel insurance plans cover collisions and loss of use for less than what the rental car company charges.

Related: Stacked Vs. Unstacked Car Insurance | A Complete Guide

How Much is Rental Car Insurance?

Costs for rental car insurance vary by type of car and area. But in a word, it’s expensive. On average, insurance for a rental car costs $61 per day, but again, the price varies on how much coverage you buy and where you rent the car.

Concluding

So, should you get insurance for a rental car? It depends on whether you want to have peace of mind that you’ll be taken care of, even in the worst case. If you don’t already have full coverage insurance, choose the collision damage waiver or loss damage waiver from the rental service if you want coverage.

Inattention, bad driving, bad handling, and reckless driving are all more common in rental cars than in other cars. You might be a great driver on your daily commute, but driving in an unfamiliar commute can be stressful.

FAQs

What does it mean to rent a car with renters insurance?

The theft of your personal belongings from your car while it’s parked on your rental property is covered by renters insurance, but theft of the car itself (or parts of it) is not, even if the car is parked on your rental property at the time. Theft or damage to a car is covered by auto insurance.

How much does it cost to rent a car with full insurance?

If you buy all the protection a car rental company offers, you’ll pay an extra $30 to $60 or more daily. This includes the waiver for loss or damage, liability coverage, and coverage for personal accidents and belongings.

What happens if you don’t have insurance and damage the rental car?

If you take a car without insurance, you’ll have to pay for any damage you cause. Your state’s minimum liability insurance comes with a rental car, but it doesn’t cover damage to the car that you caused.

Does your personal auto insurance cover rental cars?

Most of the time, your personal insurance covers rented cars as well. You’ll have the same coverage and limits as with your main car. Check with your company to see if it has business auto insurance if the trip is for work.

Do you need extra insurance when you rent a car in the USA?

The rental company will cover the state’s bare minimum if you don’t already own a car with insurance. But you might need rental car insurance if you want more protection or if you’re traveling abroad or for work.

What does CDW mean?

Collision damage waiver (CDW), which is also called car rental insurance, is like collision insurance in that it protects the user from having to pay for all or some of the damage to a rental car in the event of an accident. CDW may also cover theft or damage done by someone else. Most of the time, the renter will only have to pay a fee if there is an accident.

What’s the difference between CDW and LDW?

Collision Damage Waiver (CDW) protects a rental car if it gets damaged in a crash. LDW, on the other hand, is a mix of CDW and Theft Protection. If your rental car is stolen while you have it, you will be covered for a replacement.