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Does Your Auto Insurance Cover Rental Cars? Rental Car Insurance Basics

Summer is a great time to get away for a long weekend or road trip with your friends. But if you rent a car, do you know how rental car insurance works? And if your clients come to you with questions about their personal auto insurance policy and if it covers their rental car, do you know the answers?

Learn more about rental car insurance basics in this helpful guide!


Rental Car Insurance Basics

If you plan to rent a car this summer to head across town or across the country, you’ll need car insurance. But if you already have a personal auto insurance policy, you might wonder if that policy will cover your rental car. And if you don’t have a car insurance policy of your own, you may have other questions about rental car insurance.


Using your own auto insurance policy

One option you have when renting a car is using your own auto insurance policy. Your own coverage may extend to cover damages to rental cars. Read your policy carefully to know what coverages you may have for rental cars — and help your policyholders understand their coverage when they have questions. If you don’t carry collision or have lowered your own coverage limits to save money, you may not have coverage for damages to a stolen or damaged rental car. If you rent a car for business use, not pleasure use, your personal policy may not apply.


Check other policies for possible coverage

Examine any other insurance policies you already own for possible rental car insurance coverage. For example, your homeowner’s or renter’s policy may afford some coverage for lost or stolen personal items. This may provide some coverage for your belongings if damaged or stolen from the rental car. An umbrella policy often provides collision coverage for rental cars worldwide on a primary basis.


Purchasing rental car insurance from the renting agency

When you rent a car, the car rental agency will offer you coverage. If you don’t have your own policy or if your carrier limits coverage for rental vehicles, you should consider adding rental car insurance when you rent it. The agency will offer you at least state-minimum liability limits, which you may want to increase. They also may offer an LDW, or Loss Damage Waiver, which isn’t technically insurance but can be a helpful product when renting a vehicle. The LDW may help a renter avoid loss of use fees for a damaged or stolen rental vehicle. Because loss of use costs add up quickly when a rental car is out of commission, the LDW can be valuable.


Using rental car insurance coverage on a credit card

The credit card you use to pay for your rental car may include some rental car insurance coverage. The coverage may be limited, however, and some types of rental vehicles are often excluded, like luxury cars, motorcycles, and trucks. Most credit card policies are secondary, meaning any primary rental car insurance coverage you have would be the primary payer.


The Bottom Line on Rental Car Insurance

The bottom line on rental car insurance.

When renting a car, remember to consider if you will need rental car insurance. While no one wants to pay for duplicate coverage, sometimes you need to buy a policy from the rental car agency.

Review this checklist to decide if it is worth paying for the coverage from the rental car agency. If any of these situations apply to you, you may want to purchase additional rental car insurance:

  • If you don’t have your own personal auto policy
  • If you plan to drive outside the US
  • If you don’t carry comprehensive and collision coverage on your personal auto policy
  • If you don’t want to risk a higher deductible or loss of use claim

Talk with your policyholders about their rental car insurance needs. Because it is a common question, you may want to proactively communicate with your clients by sending an informative email or social media message about rental car insurance. Make sure you and your clients have coverage this summer before heading out for a road trip in a rental car.

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