Do I need insurance when I rent a car?

When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.

Before you rent a car:

Contact your insurance company
Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it’s used for pleasure and not business. If you don’t have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.

Call your credit card company
Find out what insurance your card provides. Levels of coverage vary.
If you don’t have auto insurance, you have two choices: you can 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 on your own car, you may not need to purchase this 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. This costs approximately $200 to $300 per year. Frequent car renters sometimes find this more costeffective than constantly paying for the extra liability coverage.

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 may 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 may 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 and may deny 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.

In addition, if you’re thinking of buying an umbrella liability policy, a non-owner auto policy may meet the
underlying auto insurance policy requirements. Umbrella liability insurance provides high limits of liability
coverage above basic policies. Most insurers will not issue an umbrella liability policy unless the basic policies
meet certain dollar limits of coverage.

A non-owned auto insurance policy covers you for damage you may cause to someone else’s car and liability
for injuries to its occupants, or to pedestrian, in the event of an accident. The policy will also provide medical
payments coverage for you and your passengers, and underinsured and uninsured coverage. This 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 or check with your credit card company first.

Note: If you’re renting a car abroad, you may need an international drivers license.

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