Does My Auto Insurance Cover Rental Cars?

Before purchasing rental car insurance, drivers should review their existing vehicle insurance policies. Rental car insurance can be as costly as your daily rental fee, and if you already have coverage, buying insurance from the rental company would be redundant and a waste of money. Typically, a standard auto insurance policy automatically extends your coverage to a rental car, treating them the same as your personal vehicle, complete with the application of deductibles. Essentially, any car you rented for personal-use within the US enjoys protection through your existing vehicle insurance policy, as long as they’re compatible with your own car.

Rental Auto Coverage through Own Insurance

For example, if you have a full coverage vehicle insurance policy, it provides you the same liability coverage you have as well as Collision and Comprehensive coverage for an auto you hired. In other words, any damages and injuries you caused to third parties with the rental car would be covered up to your policy limits. In addition, any damages you caused to the hired auto would be covered minus deductibles. And if you have liability only vehicle insurance, you would only have this coverage and no physical damages coverage to the rental car.

Your Collision and Comprehensive coverage would pay for most damages resulting from accidents, fire, theft, vandalism and weather related damages. Nevertheless, it won’t include extra charges rental companies may levy for things like “loss of use” because your personal auto insurance doesn’t have such provision.

So, it may be advisable to check your credit cards and see if any of them offer insurance coverage in case of rentals. Then, you can use the card that is most advantageous for insurance purposes to pay for the hire costs. Also, you may want to consider buying additional coverage from the rental company for any gaps.

Loss or Collision Damage Waiver

As mentioned above, your typical Collision and Comprehensive coverage pays for repairs or total loss of a rental automobile. Nonetheless, rental companies offer a similar product known as a Loss or Collision Damage Waiver, which is not technically an insurance product but an agreement to transfer all the financial responsibility to the hire company in case the rental automobile is damaged in an accident, gets stolen or sustains weather, fire or vandalism damages. The waiver includes loss of use as well.

If you have Liability-only vehicle insurance you may be able to use it and buy the Loss/Collision Damage Waiver from the rental company, rather than the whole coverage. Many people buy non-owner auto insurance for this purpose that provides liability coverage for rental cars. Also, if you are renting a sports, luxury or a car much different than yours, you may need to buy Collision Damage Waiver from the rental company, as your insurer may not cover a vehicle that is much more expensive or riskier than your own automobile.

And if you have no vehicle insurance, you must buy liability coverage as well at the rental counter or from a third party insurer because it is illegal to drive a vehicle without insurance virtually everywhere in the US.

It is always best to make sure by giving the agent a call and checking how far your vehicle insurance policy extends to rentals and what are the conditions, if any. Here are a few points to keep in mind before using your personal automobile insurance policy to cover a rental car:

  1. Majority of personal automobile insurers will not extend coverage to commercial rental vehicles like Uhaul trucks or vans at all.
  2. It will only include personal use rentals like holidays and visiting family and not business trips.
  3. Most insurers have restrictions on what type of cars you can hire. While they are normally happy with automobiles comparable to yours, they may not extend coverage to a sports car that is much higher risk than your family sedan or a luxury car that is several times more expensive.  If you are looking to rent something a bit different or exotic you should call your insurer first and check if they will include this vehicle.
  4. Your personal car insurance may not extend coverage to any rental car abroad.

So, checking your own vehicle insurance provisions for rental cars can save you money. Also, you should check your credit cards for additional benefits and extra peace of mind but remember that you must pay for the rental with the card if you want to take advantage of its insurance benefits.