Auto Insurance is a must when renting a car. However, if you have adequate insurance on your own car–including collision and comprehensive coverage–it is probably not necessary to purchase insurance from a rental car company.
To be on the safe side, contact your insurance company before you rent a car. In most cases, the coverage and deductibles you have on your personal auto insurance policy would apply to a rental car, providing the rental is used for pleasure and not business.
You should also check with your credit card company, as most cards offer insurance for car rentals. Levels of coverage vary, so contact your card’s customer service department to verify exactly what they provide.
If you don’t have auto insurance, you have two choices: you can either buy coverage at the car rental counter, or you can purchase a non-owner auto liability insurance policy.
Rental car counter insurance
Rental car counter insurance can provide the following coverage:
- Collision Damage Waiver (CDW)
Sometimes called a Loss Damage Waiver (LDW), this coverage relieves you of financial responsibility if your rental car is damaged or stolen. The CDW may be void, however, if you cause an accident by speeding, driving on unpaved roads or driving while intoxicated. This coverage generally costs between $9 and $19 a day. If you have comprehensive and collision coverage on your own car, you may not need to purchase this additional coverage.
- Liability Insurance
This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance. It generally costs about $9 to $14 a day. If you don’t own a car and rent cars often, consider purchasing a non-owner liability policy.
- Personal Accident Insurance
This provides coverage to you and your passengers for medical/ambulance bills. This type of insurance usually costs about $1 to $5 per day, but might be unnecessary if you are covered by health insurance or have adequate medical coverage under your auto policy.
- Personal Effects Coverage
This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters insurance, you might be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1 to $4 per day.Some rental car companies combine personal accident and personal effects coverage together as one type of insurance, while others sell it individually.The cost of insurance at the rental car counter will vary depending on the rental car company, state and location of the dealer and the type of car you rent.
Some rental car companies may check your credit and driving history. Depending on the results, they may deny you coverage. Check with the rental car company to find out its policy.
Non-owned auto liability insurance
Instead of buying liability coverage from the car rental company each time you rent a car, you can purchase a non-owner auto liability insurance policy from an insurance company for about $300 a year which might be cheaper if you rent frequently.
A non-owned auto insurance policy covers you for damage you may cause to another car as well as liability for injuries to its occupants, or to pedestrians, in the event of an accident. The policy will also provide medical payment coverage for you and your passengers, as well as under-insured and uninsured coverage. The latter coverage pays for the cost of an accident involving a hit-and-run driver or a driver who has little or no insurance.
However, non-owned auto insurance does not provide collision coverage. Collision coverage pays for damage to the car you’re driving if you crash into another car or object or the car rolls over. You have to buy this from the car rental company. However, some credit cards provide collision coverage if the rental car is paid for with the card—so check with your credit card company first.
Note: If you’re renting a car abroad, you may need an international driver’s license.