
Does My Car Insurance Cover Rental Cars?
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Like any other vehicle, rental cars need car insurance to be operated on the roadway. You'll need at least liability insurance. It's state-mandated and pays for injuries and property damage you accidentally cause to others.
It's also wise to have other types of car insurance that can help pay to repair or replace a rental car you damage or medical bills for you and your passengers if you cause an accident.
Your personal auto insurance policy will generally cover a rental car used for personal travel. If you're driving a rental car for business use, be aware that some insurers don't cover a vehicle rented for business purposes.
Before booking your rental car, check with your car insurance company to verify whether you have rental car coverage from your current policy and review coverage details.
Here are common types of car insurance coverage that may be required by states or optional and how they apply to a rental car.
Liability car insurance pays others for injuries and damages if you're at fault in an auto accident. For instance, if you crash into another car while driving a rental car, this will pay for the damage to the other person's car and injuries the other drivers and passengers suffered, up to the policy's limits. It also will pay for your legal defense and judgments if you're sued because of the accident. It is required in most states.
Personal injury protection (PIP) pays you and your passengers' medical expenses resulting from an accident when you're driving a rental car, regardless of fault. It also pays your lost wages and replacement services for tasks you can no longer perform, such as child care. It is required in 15 states.
Medical payments (MedPay) coverage pays medical expenses for you and your passengers if you're in an auto accident in the rental car. MedPay is similar to PIP, but has low limits (typically $1,000 to $5,000) and doesn't have the extra benefits that PIP provides. It is required in three states (Maine, New Hampshire and Pennsylvania).
Collision insurance is an optional coverage that pays to repair or replace your vehicle after an auto accident, minus your deductible. If you crash into another car with the rental car, or crash into an object like a fence, collision insurance will pay for the damage to your rental car.
Comprehensive insurance is an optional coverage that pays to repair or replace your car if it's stolen or damaged due to problems such as fire, falling items like tree branches, flood water, hail, striking an animal or vandalism. For example, comprehensive will help pay for the repairs if your rental car is damaged if you drive through a flooded street. Collision and comprehensive coverage have a car insurance deductibl if you make a claim.
Before renting a car, verify that your car insurance coverage extends to rentals and check your policy for exclusions. For instance, your auto insurer may have an exclusion for exotic vehile rentals or rentals over a certain value.
Some credit cards provide rental car insurance as a perk. These credit card companies usually require that you use their card to pay for the rental car, are the primary renter and decline the rental car company's collision damage waiver.
Depending on your credit card, it may offer primary or secondary rental car insurance.
Most credit cards provide secondary coverage, but the best credit cards for rental car insurance offer primary coverage. Here's the difference:
Consider a rental car company's insurance options when you don't have other coverage for a rental car or would like to supplement your existing coverage.
For example, maybe you have low liability limits on your personal auto policy and would like higher limits while driving the rental car. In that scenario, you can buy supplemental liability insurance from the rental car company to raise the liability limits. That way your coverage will pay out a higher amount if you cause an accident that injures someone or damages their property.
Here are common coverage types of rental car insurance you'll find.
SLI provides liability insurance with higher limits. Limits vary depending on the rental car company. For instance, Alamo and Enterprise provide up to $300,000 in liability coverage, while Budget offers up to $500,000. Hertz provides up to $300,000 in most states but up to $2 million in California and Florida. Average costs can run from $8 to $17 a day.
Some rental companies refer to SLI as supplemental liability protection (SLP) or liability insurance supplement (LIS).
A collision damage waiver is technically not insurance but waives your financial responsibility if your rental car is damaged or stolen. This coverage is also called a loss damage waiver (LDW). A CDW can cost around $10 to $30 per day.
Also known as a damage waiver or loss damage waiver (LDW)
PAI pays medical bills for you and your passengers if you get hurt in an accident while driving a rental car. PAI typically covers ambulance bills, medical bills and accidental death and dismemberment. It can cost about $5 to $13 a day.
PEC covers you and your passengers' personal belongings, such as a laptop or luggage, if they are stolen from the rental car. The cost can be about $6 to $16 a day. Some car rental companies sell PAI and PEC together, such as Budget, which calls it Personal Accident and Effects Coverage (PAE) coverage.
Note that most renters and homeowners insurance policies will help pay to replace personal items stolen from a rental car, so you may not need this coverage from a rental company.
Roadside assistance plans cover rental car problems you have on the road, such as lockout service, replacement of lost keys, flat tire service, towing, dead battery jumpstarts and fuel delivery.
Your specific situation will determine whether you need rental car insurance. Here's our take on when to consider or skip buying insurance coverage at the rental car counter.
Get Forbes Advisor's ratings of the best insurance companies and helpful information on how to find the best travel, auto, home, health, life, pet, and small business coverage for your needs.
In addition to your personal auto insurance, you may already have existing coverage from other policies that can extend to your rental car for certain needs. This can include:
If you don't have auto insurance or other policies or benefits covering a rental car, you may want to consider a stand-alone policy.
Stand-alone policies can be cheaper than coverage the rental car agency offers. If you want to buy rental car insurance, comparing quotes before going to the rental car counter is wise. Here are some options:
With so many choices for car insurance companies, it can be hard to know where to start to find the right car insurance. We've evaluated insurers to find the best car insurance companies, so you don't have to.
Rental car insurance may be worth it if you don't have adequate coverage through a personal car insurance policy, credit card or insurance policies. If you don't have other coverage options—or want to fill coverage gaps—rental car insurance can be worth it.
For example, if neither your auto insurance nor credit card covers damage to a rental car, it's worth considering CDW coverage from the rental car company or a stand-alone policy.
Some state laws require car rental companies to provide state-minimum liability car insurance. However, if you have personal auto insurance, state laws or rental car companies' guidelines may say that your auto policy is primary. That means it would be used first if you cause an accident.
If you don't have a personal auto policy or other coverage for the rental car, you would need to buy liability coverage in states that don't require rental agencies to provide it, such as California and Texas.
A collision damage waiver (CDW) might be a good choice if you don't have a personal car insurance policy or credit card that will cover damage to a rental car or its theft. If you have collision and comprehensive coverage on your auto policy, it should extend to your rental car.
A CDW may also be a wise choice if you have car insurance but don't want to risk increasing your rates if you have to make a claim for a damaged rental car. Using a CDW will allow you to avoid making a claim on your personal auto policy.

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