It isn't necessary for you to have car insurance of your own when renting a car. However, the rental car company will usually require you to get rental car insurance from them or another qualified source before you drive the vehicle off the lot. Fortunately, there are options to choose from when getting insurance for a rental, including many credit cards.
Do you need car insurance to rent a car?
A personal car insurance policy isn't necessary to rent a car. Most rental car companies require a minimum amount of car insurance coverage to be in place when you rent a car, however, so you will need to purchase coverage in order to rent a vehicle. If you can't show proof of insurance at the time of the rental, the rental company will require you to purchase it before the rental process can proceed. According to Marketwatch, the price of car rental insurance averages between $31 and $60 a day, depending on the types of coverage you get.
Does my car insurance cover a rental car?
Most personal car insurance policies provide coverage for rental cars. The coverage for the rental car will be the same as your personal coverage limits and deductibles.
An important thing to know is that your personal car insurance usually only provides coverage for a rental car if you're renting it for non-business reasons. You will want to be sure to understand the limits of your personal policy if you're renting the car for personal reasons.
Types of rental car coverage
Rental car insurance providers may offer various kinds of coverage. They include:
Collision damage waiver and loss damage waiver
A collision damage waiver (CDW) is a basic form of coverage for rental cars. It is not actually a form of insurance, but rather a waiver of responsibility in the event of an accident.
The thing to know about a CDW is that coverage is limited strictly to the covered vehicle. If you're in an accident and cause property damage or injuries to others, you will be responsible for the costs that arise. You will need to have personal car insurance or a supplemental source of coverage to avoid paying those costs out of pocket.
A loss damage waiver (LDW) provides the same limits of protection as a CDW with the added benefit of auto theft and vandalism coverage.
Supplemental liability insurance (SLI)
As the name implies, SLI covers injury and property damage beyond the rental car's minimum liability limits. Most states have laws that require car rental companies to have some liability insurance as part of the rental, but these limits are usually very low and insufficient in the event of a serious accident. SLI provides a buffer in the event of a car accident to prevent having any costs not covered by the basic liability fall in your lap.
Personal accident insurance and personal effects insurance
Personal accident insurance covers some of the exclusions not covered by liability insurance, including medical, ambulance and death benefits for the rental car policyholder and their passengers. Personal effects insurance covers the theft of belongings from the rental car.
But these types of coverage may be unnecessary. If you have personal injury protection (PIP) or health insurance, either policy should cover what personal accident insurance would. If you have a homeowners or renters insurance policy, it should cover possessions stolen from your car.
How to get rental car insurance
If you have your own car insurance, you can probably forgo rental car insurance. Check your car insurance policy to make sure you know the limits of rental car coverage it provides. It's important to know that if you are using your own car insurance and are in an accident in the rental vehicle, the accident will be on your insurance record. This will likely result in a premium increase for your car insurance policy at renewal time.
If you are not going to use your own car insurance or don't have a policy, rental car companies offer their own insurance, but it is often expensive. There are third-party insurance companies that offer rental car insurance, which can be cheaper. Furthermore, many credit card providers offer rental car insurance as part of their cardholder benefits. Check with your credit card companies to see what options they have.
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