Rental-car insurance explained

Bankrate’s insurance editorial team covers scenarios where you may need rental insurance and explains how some common types of rental-car insurance work.

Figuring out if you need rental-car insurance can be confusing. The type of coverage you carry on your personal auto policy, your contract terms and the reason you are renting a vehicle can all determine whether you should purchase extra rental-car coverage.

In most cases, the coverage you carry on your auto policy will extend to a rental car as long as you rent a private passenger vehicle. In some scenarios, however, your personal auto policy can leave gaps in coverage that will cost you if you are in an accident in your rental car. Most insurance professionals advise exploring your options with your agent before driving off in a rental vehicle.

• You do not have any type of insurance.

You’ll want to purchase rental-car insurance if you don’t have car insurance. That’s because most states have laws requiring you to carry a minimum amount of car-insurance coverage while driving a vehicle. Consider purchasing a damage waiver and liability coverage from the rental company to protect your rental.

Some uninsured drivers rely solely on the rental-car coverage that their credit-card company provides. Although rental-car coverage through your credit card can be helpful if you already have a primary insurance policy, it might not offer adequate protection as the only means of insuring your rental vehicle. Before declining additional damage protection, you may want to call your card issuer for more information on their rental-car coverage policy.

• You do not have collision or comprehensive coverage.

Collision and comprehensive coverage are part of what’s known as full-coverage car insurance, which covers damage to your vehicle after an at-fault accident or other incident, such as hail, theft or fire. These types of coverage typically extend to a rental vehicle. However, if you only have liability insurance coverage, your personal car insurance won’t cover damages to the rental.

To protect yourself in this situation, you can purchase a loss-and-damage waiver from a rental agency. This agreement waives your financial responsibility for damages or loss to the rental car.

• You do not want to pay a deductible.

If you rely on your personal car insurance to protect your rental car, and you get into an accident, you typically have to pay a deductible. However, if you buy rental-car insurance and you get into a collision, there is no deductible required.

Rental-car insurance is somewhat similar to regular auto insurance. You can select the type of coverage and the level of coverage you want based on your needs. However, the types of rental-car insurance are much different from auto insurance.

Before getting rental-car insurance, you should be aware of your options. The most common types of rental-car insurance include:

• Loss-and-damage waiver: Sometimes called the collision damage waiver, this is a waiver rather than a true policy. It essentially says that the rental company will not come after you in the event that the rental car is damaged or stolen. However, if you have collision and comprehensive car insurance, this may be included in your policy.
• Supplemental liability protection: This covers damage you do to other vehicles or property. However, your own liability insurance may cover these instances, even when you are driving a rental car.
• Personal accident protection: Personal accident protection covers the medical costs for you and any passengers if you are involved in an accident. Again, if you have personal injury protection or medical-payments coverage under your existing policy, you may already be covered.
• Personal-effects coverage: This coverage pays for any belongings that may be stolen from your rental car. In this case, your homeowner’s insurance or renter’s insurance policy may offer similar coverage.

While there are many different types of rental-car insurance, it does not cover everything. For example, this type of insurance doesn’t reimburse you for the cost of renting a car. However, you may be reimbursed for rentals in some circumstances if you have rental reimbursement coverage — which is typically an endorsement you can add to your existing policy for an extra cost. Note that this coverage provides reimbursement only if you’re renting a car because your insured vehicle has suffered a covered loss.

The cost of rental-car insurance depends on a few factors. For one, it depends on the company you buy coverage from. It also depends on the state, what type of car you are renting and how many miles you are driving. Purchasing add-on coverages will also increase the amount you pay.

Many credit-card companies offer rental-car insurance as one of the benefits for cardholders. However, rental-car insurance provided by your credit-card company is usually secondary insurance. That means if you get into an accident or the car gets stolen, your auto-insurance company will get billed first. If that is the case, your deductible will apply to the claim.

There are some credit-card companies that offer primary rental-car insurance, although it is less common. Primary insurance does not go through your personal auto insurance, so you do not have to pay a deductible. You can call your credit-card company to determine if your card offers rental-car insurance and what type of insurance it offers.

Most major credit-card companies, like Visa, MasterCard and American Express, all offer some form of rental-car insurance for their cardholders. To take advantage of the coverage, you usually have to pay for the rental car using the card and rent the car in your name.

Most major car-insurance providers automatically provide rental-car insurance coverage at no additional cost beyond what you are already paying for your monthly premium. However, it is important to remember that the coverage you carry on your policy is what will also apply to your rental. If you have liability only on your personal auto policy, you may want to consider bridging the gap with a loss-and-damage waiver.

Some companies offer standalone rental-car coverage policies. The rates for these policies can be cheaper than a standard auto policy, but the coverage provided is not as robust.

• Allianz Global: Allianz Global’s Rental Car Damage Protector includes $50,000 in coverage, for just $11 per day, and offers coverage anywhere in the world. Every policy comes with up to $1,000 in coverage for lost baggage and personal items and $1,000 in trip-interruption coverage.
• Bonzah: With a Bonzah rental-car insurance policy, you can get up to $35,000 in coverage, plus up to $500 in coverage for lost luggage and personal items, no deductible and a 10-day free look period. Bonzah also offers up to $1 million in supplemental liability coverage.
• RentalCover.com: Rental-car insurance from RentalCover.com is meant to supplement insurance from your credit-card provider. The company claims that drivers can get supplemental insurance for up to 50% less than a loss-and-damage waiver from the rental counter. One of the biggest draws is that drivers can cancel their rental insurance for a full refund up until their car pickup time.
• Sure: Sure is a mobile-based rental-car insurance company that is entirely digital. When you download the app, you can select your trip dates, the type of coverage you want, the deductible and more. That means you can update and make changes to your choices on the go. Every policy comes with great perks, like flat-tire protection, lost-key reimbursement and towing coverage.

• What is the best car-insurance company? Since coverage options and premiums vary by insurer, there’s no single insurance company that’s right for everyone. To find the best car-insurance company for you, select a few insurance companies that interest you and request quotes from each to compare. While shopping, consider various factors, such as rates, coverage options and customer-service ratings.
• Does rental-car insurance cover roadside assistance? When you rent a car, rental agencies typically don’t include roadside assistance, though some companies like Hertz may include a basic roadside plan. If you already have roadside assistance, then it may extend to your rental. In addition, some rental companies may allow you to purchase a separate roadside assistance — which is different from rental insurance.
• How will an accident in a rental car affect my insurance? Getting into any accident will most likely affect your insurance premium, whether it is in your car or a rental car. This is especially true if you have rental-car insurance through your auto-insurance provider or a credit-card company. Anytime you file a claim that is attached to your auto-insurance policy, the company will know you had an accident and will likely increase your rate accordingly.