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Do I Need to Get Rental Car Insurance?

If you don't have your own car insurance policy or a credit card, you may need to get rental car insurance.

When renting a car, you're required to have insurance. If you don't have a personal car insurance policy, you'll probably need to buy rental car insurance through the rental company. If you have a personal insurance policy, it should cover your rental car. Regardless of where you get coverage from, you need to have the minimum liability limits mandated by the laws of the state you'll be driving in. Other supplementary rental car insurance is available depending on your own personal needs.

This article covers:

Do I need rental car insurance?

You don't need insurance to rent a car. But if you don't already have your own car insurance policy, you'll likely need to buy rental car insurance when you rent a car.

You are legally required to have insurance when driving a rental car in almost all states in the country. The minimum you need will be the state-mandated liability limits of where you will be driving.

Liability insurance covers costs that can arise due to medical costs, legal fees and property damage you cause in an auto accident. States usually require these limits in order to reduce auto insurance rates for everyone.

Even if you have your own auto insurance to cover a car rental, getting a rental car insurance policy has some advantages:

  • It covers incidents your auto insurance may not: Rental car insurance can cover towing expenses and any charges that may come after a crash. Auto insurance policies don't always cover these, leaving you to pay for them out of pocket.
  • It can help keep your premiums low: If you file a claim with your auto insurance provider after a rental car accident, you will likely see an increase in your car insurance premium. An increase such as this can stay on your policy for anywhere from five to seven years on average. A claim you make on a rental insurance policy will not be connected to your own auto insurance. It's a small investment in comparison to a rate increase over several years.
  • It covers you across states: Since different states have different liability insurance requirements, it's possible that the limits of your own auto insurance liability coverage won't be adequate for the state you're driving in during a vacation or other trip. Rental car insurance will have the correct limits you need for where you're driving.
  • It offers extra coverage: If you don't have collision or comprehensive insurance, you could find yourself having to pay out of pocket for a crash. With a rental car insurance policy, you can add coverage that will pay out for damages or theft of the car.
  • It has international coverage: Even if your own auto insurance provides for rental car insurance, it may only provide coverage within the U.S. You can purchase a rental car insurance policy that provides the coverage needed for the country you are visiting.

What is rental car insurance?

First and foremost, rental car insurance provides you with the required limits of auto liability insurance when driving a rental car. Just like when you're driving your own car, you're legally required to carry the minimum state-required auto insurance with a rental car. If you don't have car insurance of your own, rental car insurance becomes even more of a necessity. If you are caught driving without insurance, you may face steep fines.

Categories of rental car insurance

Basic car rental insurance covers the minimum state-required liability limits. You can, however, add other areas of coverage depending on your needs.

Supplementary liability protection

This coverage pays for damage you cause to other vehicles or property beyond the state minimums. State liability limits tend to be low. A major crash could result in an extended hospital stay or a court case with costs well above what basic rental car insurance limits cover. Supplementary liability coverage is usually a good way to avoid paying thousands of dollars out of pocket if the costs of a crash go beyond a car rental policy's minimum limits.

Personal accident insurance

This add-on insurance covers medical costs including ambulance fees, medical treatment and death benefits for you and your passengers. An ambulance ride after a major accident may cost upwards of $1,000 — and even more if you have injured passengers with you. Personal accident insurance may cover such incidents for around $1 to $5 a day.

Personal effects coverage

If you have items like your laptop or travel necessities in your rental car when it's stolen, or your belongings are stolen directly out of the rental vehicle, personal effects coverage pays to replace your personal property stolen from your rental car, up to the policy's limits. It may cost between $1 and $5 per day.

Collision damage waiver/loss damage waiver

Also known as CDW or LDW, this isn't insurance coverage per se, but rather makes the rental car company responsible for damages to the car. This waiver also covers towing and loss of use (LOU) fees. The latter are fees that a rental car company charges while the car is being repaired. This coverage usually runs $9 to $19 a day.

How do I get rental car insurance coverage?

Purchasing rental car insurance at the booth when you rent a car is the most common method of getting a policy. You can use your own auto insurance, but you have other options, such as buying a policy through a third-party auto insurance provider or using coverage provided by your credit card. Regardless of what kind of insurance you buy, rental car companies might require you to pay for a damage claim filed upfront if you're not using their provided insurance. The insurance provider would then reimburse you for the claim amount.

Third-party rental car insurance

Some rental car insurance providers can sell you a policy before you even get to the rental booth. They can sell most of the same types of insurance for rental cars that you can get from the car rental company itself.

This can be a good choice if your own policy's liability limits are too low for where you'll be driving. Using a third-party insurance company usually requires you to refuse coverage from the car rental company.

Rental car insurance from your credit card

Many major credit card companies offer rental car insurance as a perk. The coverage they provide comes in two different forms: primary and secondary. Primary car rental insurance covers damage or theft of the rental car. This coverage requires you to decline the insurance the rental company offers you. The primary car insurance doesn't cover personal injury, liability or theft of your personal property. This can put you at a disadvantage if you want greater coverage.

Secondary car rental insurance covers the same areas as primary insurance, just to a lesser degree. It covers whatever your primary insurance used for the rental does not. As such, it doesn't work well on its own.

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